LONDON (Reuters) - Businesses in Britain’s dominant services sector reported the first rise in profits in more than two years during the past quarter, industry figures showed on Monday, in a contrast with downbeat official data released last week.
The Confederation of British Industry said volumes in the services sector as a whole grew at the fastest pace since August 2015 in the three months to February, and profits rose too.
“Despite feeling the pinch from high inflation, business volumes have bloomed, profits have grown for the first time in over two years and hiring is on the up,” CBI chief economist Rain Newton-Smith said.
Britain’s economy grew at its slowest rate since 2012 last year, as a boost from strong global demand failed to offset a squeeze on consumers from higher inflation triggered by June 2016’s Brexit vote, official data showed on Thursday.
Services output in December was flat and up just 1.4 percent on the year.
But the CBI said businesses in its survey reported consumer demand had picked up after a decline in the previous three-month period, while cost growth was under better control.
Nonetheless, investment plans were muted, which the CBI blamed on uncertainty ahead of Britain’s departure from the European Union in March 2019.
“Plans for expansion among business and professional services firms have turned downwards. Up and down the country, businesses are plainly worried at the lack of clarity over the UK’s future relationship with ... the EU,” Newton-Smith said.
On Friday, CBI director-general Carolyn Fairbairn said business growth risked being stunted if firms lost ready access to EU migrant labour.
Reporting by David Milliken, editing by Andy Bruce