Industry survey shows UK economic growth softening

Growth in the UK economy continued its recent softening trend, according to a survey released Monday by the British Chambers of Commerce (BCC).

The BCC's quarterly survey revealed that most of the key economic indicators were either static or decreasing, indicating a softening of economic growth for 2016 after three years of strong growth.

The UK economy is dominated by the services sector, which represents 76 percent of economic activity, and the percentage of services firms reporting increased sales dropped by six points over the previous quarter's figures.

This was still a healthy figure, indicating growth, but it also demonstrates a weakening in the rate of growth which was backed up by figures for the sector for investment, for confidence and orders.

The orders figures fell by two points, to the lowest figure for nearly three years, while the figures for firms considering investment and firms confident about the future fell by eight points and by one point respectively.

In the smaller manufacturing sector, which makes a large contribution to the UK's export figures, there was a modest increase in figures overall but from a low base. There was a seven point increase in manufacturing firms reporting increased exports.

However, domestic indicators largely fell, with the balance of manufacturers reporting improved domestic sales down two points, although the balance of firms reporting improved orders was up by three points in the services sector.

David Kern, BCC chief economist, said the figures were "disappointing."

He said "Our survey points to a slowdown in Q1 2016. This is the inevitable consequence of mounting global and domestic uncertainties, but it is concerning that the vibrant and dominant services sector is likely to face mounting challenges in the next few years."

Kern added: "The improvement in the manufacturing export balances, probably helped by sharp falls in sterling, is welcome. But exports are still weak by historical standards."

The imbalance between exports and imports was a danger for the future, said Kern, with implications for credit rating. The UK current account deficit, the amount imports exceeded exports by value, was revealed at the end of March as being at a record 96.2 billion pounds (136.92 billion U.S. dollars) for 2015.

Kern said: "Our current account deficit has escalated to a record high in 2015 and is likely to remain unacceptably large in the next few years. Britain's credit rating will be at risk, unless we make improving our trade balance and boosting our exports national priorities."

The survey is based on responses from 8,500 firms during the first quarter of this year and is the largest such business survey in the UK. (1 pound = 1.42 U.S. dollars)