UK to avoid triple dip inflation: BCC

A resilient services sector would prevent a triple-dip recession in the UK economy, the British Chambers of Commerce (BCC) said.

According to the economic survey, the economy had made progress, manufacturing and services had strengthened in the first quarter, but there were ''still mountains to climb''.

Overall it forecasts positive, though subdued, economic growth for 2013, even as it provided a boost for chancellor George Osborne ahead of the release of the Q1 GDP figures.

The 7,300 respondents to the BCC survey reported strong export balances, as service export orders and deliveries reached near all time high levels, last seen in 1994.

Investment levels and business confidence about the next 12 months also improved over the period, according to the industry body.

At the same time the survey expressed disappointment that employment balances had weakened overall in the first quarter.

John Longworth, the BCC's director general, called on the government to support business confidence and foster what would likely to be ''modest but gradual economic growth this year''.

He said the results provided a glimpse of the as-yet-distant sunlit uplands of recovery. He added, businesses up and down the country were working hard to drive the economy, create jobs and export, but they could not accelerate this process alone.

BCC chief economist David Kern said the surge in the service sector's export balances suggested that pessimism over UK exports was unjustified.

A separate business survey however, suggested that  the UK's manufacturers had not been included in the recovery.

According to Markit/CIPS manufacturing purchasing managers' index, the sector continued to shrink last month.

The index registered negative growth for the second month running, with output falling at its fastest rate since October.

According to Rob Dobson, senior economist at Markit, the onus was now on the far larger service sector to prevent the UK from slipping into a triple-dip recession.

According to the BCC's survey, which included over 7,000 firms, conditions for both the services and manufacturing sectors were on the mend, but in the services some of the biggest improvements had been seen, with strong domestic sales and exports.

Services account for over three-quarters of the UK economy, while manufacturing made up around a fifth of GDP.

According to BCC chief economist David Kern, the results of the survey suggested the economy had expanded in the first three months of 2013.

He added, this was contrary to the picture of the economy as painted by official figures.

He added, the survey reinforced the BCC's assessment that recent official gross domestic product figures had exaggerated the weakness of the UK economy and the volatility in output.