Recession fears ease as construction, car sales and retail boost UK business recovery
British businesses are showing new signs of life, with bosses hoping “the worst storms in the economy have passed”.
In a boost for the Chancellor ahead of next week’s budget, the construction industry recorded its fastest growth rate in nine months, and new car sales rose for a seventh consecutive month.
A third report showed retail sales holding up strongly.
Rebounding: UK construction sector recorded fastest growth rate for nine months
The triple dose of good news will allay fears that the UK is heading into a prolonged recession as soaring prices and rising interest rates take their toll.
But concerns are growing over Jeremy Hunt’s proposal to raise corporation tax from 19% to 25% next month while ending a generous investment tax break.
Entrepreneur Sir James Dyson wrote to Hunt expressing concern about the two “tax grabs”.
He wrote: ‘The government has done nothing but pile tax on tax on British businesses. The warning came as S&P Global said its construction activity index jumped from 48.4 in January to 54.6 in February.
This was the highest level since May last year and back above the 50 mark that separates growth and decline.
Tim Moore, chief economics officer of S&P Global, said while homebuilding remained weak, the commercial real estate sector rebounded.
“Some companies noted that the easing of recession fears and an improving global economic outlook had boosted customer confidence in the commercial segment,” he said.
Max Jones, head of Lloyds Bank’s infrastructure and construction team, said: “A return to growth will be welcomed by entrepreneurs, who will hope the worst storms in the economy have passed.”
A separate report from the Society of Motor Manufacturers and Traders showed 74,441 new cars were registered last month, up 26.2% from February 2022 and the seventh consecutive month of growth.
Its chief executive, Mike Hawes, said: “After seven months of growth, it’s no surprise that the UK automotive industry faces the future with growing confidence.
“It is essential, however, that the government seizes every opportunity to support the market, which plays an important role in the UK economy and net zero ambition.”
“The next budget must propose measures that promote this transition, increasing affordability and ease of billing for all.”
And a report by the British Retail Consortium showed retail sales rose 5.2% last month as consumers splurged despite the rising cost of living.