THE UK’S dominant service sector saw growth return in the last quarter of last year, but not enough to beat pre-EU referendum levels.
Most companies in both the services and manufacturing sectors said they expected to raise prices over the next three months at the fastest rate in five years, which was widely anticipated, according to the latest quarterly economic survey by the British Chambers of Commerce (BCC).
Managers said the rising cost of raw materials and other overheads were “forcing them” to raise their prices on goods and services and could cause them to cut future investment, the BCC said.
However, confidence in future turnover, hiring expectations and investment rose for both manufacturing and services companies in the last three months of the year despite having fallen in the third quarter.
The findings, based on 7,250 responses from companies in the last three months of 2016, show that companies expect continuing growth, but at a slower pace.
Dr Adam Marshall, director general of the BCC, said: “Inflation has emerged in our survey as a rising concern for many businesses. Both manufacturing and services firms say they are under pressure, particularly from the rising cost of inputs, which is squeezing margins and may weaken future investment.
The BCC said the government must “act strongly” this year to support investment and improve the business environment to boost business confidence and nurture growth.