By Daniel Hunter
A leading HSBC economist has heralded 2013 as the year the UK returns to stronger growth, at an Economic Update breakfast event hosted by HSBC’s South West and Wales Commercial division.
Mark Berrisford-Smith, Head of Economics for HSBC’s UK Commercial Bank, addressed over 50 delegates from the Bristol and Bath business and professional services community at the Bath Priory Hotel this week.
He said that whilst consumer and business confidence is improving, 2012 is still set to be a slow year, with growth pinned at around 0.5%. Next year is forecast to see a return to stronger, “better balanced”, growth, although he warned it was likely to be 2017 — 10 years on from the start of the credit crunch — before the UK will be fully recovered.
“In the past few months there has been a tangible improvement in the mood of both consumers and businesses in the UK. Irrespective of what the official growth estimates may say, business surveys suggest strongly that a modest revival is underway in the private sector," he said.
"But 2012 will be a tough year, with the economy only likely to grow by about 0.5%, and with the trend being somewhat lumpy and bumpy on account of the disruption to North Sea gas supplies, the extra Jubilee holiday, and the Olympic Games.
“All being well, 2013 should see a return to stronger growth, of around 2%. Moreover, it is likely to be better balanced growth than the UK has been accustomed to during the past 15 years.”
Berrisford-Smith said a sustained economic recovery would require a greater contribution from exports and fixed investment, especially as the Government has taken a step back from being an engine of growth. “If the Eurozone's debt crisis can be kept under control and there are no major domestic mishaps, firms will eventually opt to proceed with expansion plans as they replace kit that is beginning to show its age and seek to remain competitive,” he told the audience.
Gary Burton, HSBC Regional Commercial Director for the South West and Wales, closed the event. He said: “It was clear from Mark’s presentation that there are still potential challenges ahead, but a more encouraging economic picture is emerging, even if it will take time to fully recover.
“South West-based businesses should to continue to look at the export market for growth opportunities, not only for the health of their own company but also to solidify the UK’s position in a fast-changing global economy. Great work has already been done in this area with a near 12% rise in South West exports last year, but there is capacity for more growth. Companies also need to look at how they can invest in their business to remain competitive and seek out new opportunities.”
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