By Marcus Leach

Fears that the economy would slip back into recession were firmly quashed with the announcement of today's UK services figures.

The latest Markit/CIPS survey of UK service providers indicated stronger growth of both activity and new business in March amid reports of an improved economic climate.

Companies kept on top of their increased workloads by adding to payrolls at a modest pace, whilst jobs were also created with an eye on the future. A fifteenth successive month of growth was, in the main, supported by a rise in volumes of incoming new business.

"This morning’s UK services figure was a welcome surprise and should quell fears that UK growth is fizzling out after a strong start to 2012," Richard Driver, analyst for Caxton FX, said.

"The recent figures out of the UK construction and manufacturing sectors were genuinely impressive and suggest there is a bit more momentum in British industry than has been indicated in recent weeks.

"The OECD’s analysis last week asserted that the UK will post another negative GDP figure in Q1, thus leaving it in technical recession, but in light of this week’s UK figures we are confident that we will see some positive growth, albeit fairly modest.

"Taken as a whole, March’s PMI figures are likely to solidify the safe-haven status of UK assets, including sterling, and will also reduce bets on further quantitative easing from the BoE.

"While the UK economy is still lagging America, this week’s data clearly highlights the diverging growth trajectories of the UK and the eurozone.

"Nonetheless, this week’s positive numbers come, as ever, with the usual caveat that the UK economy remains extremely vulnerable to fresh crises in the eurozone, high oil prices and ongoing UK austerity."

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