UK economy grows steadily but Brexit risks remain 'clear as day' says CBI

Britain's private sector grew steadily in May 2016 and further growth is forecast in the short-term future, according to a new survey. However, there are clear signs that uncertainty around the global outlook and the outcome of the EU referendum are concerning businesses, the survey also showed.

According to the latest growth indicator released by the Confederation of British Industry (CBI) on Wednesday (1 June 2016), the survey of 785 respondents across the manufacturing, distribution and service sectors showed the pace of growth in output remained stable.

May saw a balance of +11% of firms reporting a rise in production, compared with +10% in April, and firms expect growth to continue into the next quarter. However, the balance of +13% businesses that have forecast growth over the next three months is well below the +26% average seen in the corresponding period over the previous three years.

The report added UK manufacturers reported a rise in output and the services sector saw continued growth in business volumes, while retailers reported falling sales in the three months to May.

CBI's director general Rain Newton-Smith said the findings of the report painted a fairly positive picture for the British economy, although they also clearly highlighted the risks threatening UK businesses.

"While underlying conditions for the UK economy are looking pretty stable, the risks are clear as day with uncertainty still brewing over the global outlook and the EU vote around the corner," she said.

"Expectations for growth have slipped and are well below the levels of the last few years, with uncertainty swirling around the pace of output and the impact from risks on the horizon. Manufacturers and consumer services are faring better with a modest growth in output, but our retailers have seen a quieter time in the quarter to May."

Data released on 26 May showed the pace of expansion of the UK economy slowed down in the first quarter of 2016 and expanded at its slowest pace in three years over the last 12 months.