CBI poll shows UK economy is showing signs of green shoots

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The UK's economy is showing signs of green shoots, with firms more confident about the country's economic prospects after a tough winter.

British businesses expect a return to growth in the next three months for the first time since Russia invaded Ukraine in the next three months, according to the latest poll from the CBI released today.

The monthly business survey found that a majority of firms expect growth in private sector activity in April to June. This is the first time that there have been positive expectations for growth since April 2022.

The CBI also reports that activity fell slightly in the three months to March, the eighth rolling quarter in a row in which the private sector has shrunk.

The manufacturers are most optimistic, with a balance of 12% predicting a recovery in output, while service sector firms see a small uptick.

Alpesh Paleja, CBI Lead Economist, warns that the UK is skirting stagnation rather than growing strongly:

It is encouraging that the private sector is expected to return to growth in the months ahead, chiming in with a range of other data indicating some resilience in economic activity. But let's be clear, this illustrates an economy skirting stagnation-like conditions rather than delivering the strong, sustainable growth we need. The chancellor has set out an ambitious plan to deliver growth in his spring budget, but there is broad recognition that the UK still faces significant economic challenges.

Paleja cautions that Inflation remains stubbornly high and will continue to pressure household budgets.

Andrew Bailey, the Bank of England governor, warned firms that continuing to lift prices would lead to higher inflation and lead to higher interest rates.

The annual rate of UK inflation rose to 10.4% last month, but is expected to drop sharply through this year, as we catch up with price hikes in 2022. BoE policymaker Catherine Mann is concerned that core inflation will remain too high, making it harder to bring inflation down to the 2% target.

Last night, Mann told the National Association for Business Economics that persistent inflation will make it hard to set monetary policy this year.

The type of dynamic that is going to be a big factor in driving headline inflation down, because gas prices are on the down slope.

The financial markets indicate there is a 58% chance that the Bank will raise rates at its next meeting in early May. They have risen to 4.25% this month, a 14 year high.

The government is announcing an updated net zero and energy security strategy on what was originally going to be called Green Day Instead, but we're getting a new net zero strategy with a focus on oil and gas development, along with renewable energy.

The UK government will defie scientific doubts to place a huge bet on technology to capture and store carbon dioxide in undersea caverns to expand oil and gas in the North Sea.

On Thursday, Grant Shapps, the energy and net zero secretary, will unveil the powering up Britain strategy, with carbon capture and storage CCS at its heart, at a nuclear fusion development facility in Oxford.

Hundreds of the UK's leading scientists are urging Rishi Sunak to halt the licensing of new oil and gas developments in the UK ahead of the announcement.

European stock markets are poised to open a little higher: