More signs of ‘Britain the Unbalanced’

August 5, 2015

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While still signaling a solid rate of economic expansion in Britain, the latest batch of business surveys from Markit/CIPS will do little to quell unease about the lopsidedness of the recovery.

It also contained a bit of pre-financial crisis déjà vu.

Wednesday’s report showed growth in Britain’s vast service sector outpaced that of the manufacturing sector for the 31st month running – so no surprise there. Service sector-led growth has been a hallmark of the recovery since 2013.

But now there could be a familiar imbalance emerging within the services sector itself.

“If financial services providers had not seen the fastest growth since 2013, the fall in the survey would have been even sharper, with slower rates of expansion recorded in all other services sub-sectors. The huge business services sector, ranging from architects to accountants, reported the weakest rate of expansion for almost three years,” said Chris Williamson, chief economist at survey compiler Markit.

There are few signs that the economy is going to slow markedly in the quarters ahead. But longer-term, a familiar lack of variation among the engines of British growth will no doubt gnaw at policymakers, not least with some Bank of England rate-setters meeting today to chew over the prospects for the economy.

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