UK's service sector records 2.8% growth in January
The service sector of Britain posted a 2.8% growth in January, accounting for roughly 80% of the nation's economy. The UK's service industry is considered to be the only sector to have outstripped its pre-recession growth size.
The sector's growth was even greater than the estimation of ComRes survey participants, who thought the sector will account for merely 46% of Britain's economy. The growth in the service sector was driven by IT as well as professional services like law, management consultancy and architecture, which have increased by 25%.
In addition, some firms are reforming the range of services they provide. According to Financial Times, companies are providing plenty of services ranging from engineering to consultancy services. Stephen Pollard, who started his business as an electrical engineer, currently manages a management consulting group. He is more focused on consultancy and advising services rather than on engineering projects.
Other areas of growth include creative sectors that comprise entertainment fields like computer games and musical shows. Stain Westlake, Nesta's policy director, said the entertainment service sector has a huge capacity since more people like to be entertained as the world gets wealthier.
Andrew Sentence, a previous officer at the UK's central bank, said the country's economic recovery is more balanced than the people's view. The country exported more services during the final six-month period of 2015, compared to the manufacturing sector, he added.
Meanwhile, faith in the country's economic recovery has dropped rapidly since the year 2011, citing turmoil in the global market and impact of potential Brexit. The negative forecast from the country's key sector that constitutes nearly 10% of the gross domestic product will stimulate worries regarding the growth drop anticipated in 2016. The poll conducted by the Confederation of British Industry (CBI) warned about the future job cuts in the financial service sector, as reported by moneyexpert.
The survey also revealed that growth in the two financial sub-sectors that include banking and fund management seem doubtful. While faith in insurance and construction sector continues to grow towards betterment. Newton Smith, director for economics at CBI, pointed out that "Concerns over China and a volatile start to the year for markets, alongside uncertainty about a possible Brexit, have created a perfect storm to dampen optimism in financial services."
RTE News quoted the data from the office for National Statistics, which showed that the country's GDP increased by 0.6% during the fourth quarter of 2015. This economic figure exceeded the previous expectation of 0.5%. The increase in the quarterly GDP was fuelled by the robust performance of the services sector and a minute drift in the production industry.
However, the nation's present account deficit broadened to GBP 32.7 billion from GBP 20.1 billion in the previous quarter. According to George Osborne, this upward revision shows that Britain is still one among the rapidly growing economies in the world.
The economic revision indicates that the nation's growth is not nailed by the slowing global economy. The country is trying to show better economic progress amid the financial crisis that burdens its forecast.