UK Economy
Is the UK really in recession? Reuters

Eyebrows have been raised over reports of the UK slipping back into recession. The Confederation of British Industry (CBI) said the manufacturing sector's growth is actually promising.

John Cridland, CBI's Director, said: "This disappointing news comes as something of a surprise. Since the turn of the year, business confidence has improved and, while still challenging, underlying economic conditions also appear strengthened."

Others are also questioning the official figures. Andrew Goodwin, a senior economic advisor at Ernst & Young, said: "Our reaction to these figures is one of disbelief. The divergence between the stronger survey data and dire official output estimates is virtually unprecedented and must raise significant question marks over the quality of the data," according to Public Service.

Goodwin argues if the Purchasing Managers' Index (PMI) survey indicates that the construction sector is growing at rates well above average but the official data shows a 3 per cent fall, then there is a major problem. Along with that, the figures for the service sector remain questionable, he said.

CBI's Cridland echoes this: "In particular, the weakness of the service sector data does not tally closely with a range of survey indicators suggesting that the sector has been picking up through the first quarter."

"Looking forward, there are indications that the economy is slowly recovering from the below to confidence and activity which resulted from last autumn's turmoil in Eurozone financial markets," Cridland added.

The group's chief economic advisor Ian McCafferty cites a CBI survey and points to a 0.1 per cent rise in output compared to the official preliminary figures of 0.1 per cent contraction in the manufacturing sector.

McCafferty adds that the overall orders in the sector also rose in the three months following a dull January.

Nevertheless, McCafferty warned: "Given Europe is still our biggest export market, the outlook for UK manufacturing will remain uncertain until the eurozone crisis is resolved."