Economy showing signs of recovery

The British Chambers of Commerce (BCC) have suggested that the UK economy has shown signs of recovery in the first three months of this year, helped by improved overseas demand.

Based on its latest economic survey, of almost 8,000 businesses around the UK, the BCC expected there to be a 0.3% growth in the first three months of the year.

This is an improvement on previous expectations and a welcome rebound from the final quarter of 2011, when the economy contracted by 0.3%.

“The results point to a welcome but modest improvement in the economic situation. The UK economy will likely avoid a recession,” said David Kern, Chief Economist at the BCC.

“However, growth is likely to remain low for some time, and a return to a more normal pace is unlikely until 2013,” he added.

Last week, an international Think Tank said it expects the UK’s economy to shrink again this quarter, taking Britain back into recession.

The Organisation for Economic Co-operation and Development (OECD) has said that the economy will shrink by 0.4% this quarter, as a result of a drop in output.

But the BCC’s data suggests that the manufacturing sector grew at its fastest pace for ten months in March. However, it said that further economic growth will be slow.

“Unresolved problems in the euro zone may trigger new upheavals later this year,” added Mr Kern.

“Secondly, in view of the increases in oil and food prices since January, our current forecast is that the fall in UK inflation over the next 12-18 months will be slower than first expected.”

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