Activity in the UK's services sector surged in March to its highest level in seven months. The report also showed businesses in the sector are more optimistic about their long-term outlook. It added uncertainty about the outcome of the general election has caused some jitters amongst UK firms.
The positve figure suggests UK GDP growth of 0.7 per cent in the first quarter of 2015, up from 0.6 per cent mooted by the Office for National Statistics in the fourth quarter of last year this was was revised up from 0.5 per cent.
Britain's large current account deficit could damage market sentiment towards the country if the economic environment deteriorates, the Bank of England said on Tuesday. Minutes from the BoE's Financial Policy Committee meeting on March 24 showed members were worried about Britain's current account deficit, noting it was high by historical standards. The current account deficit was large and could, in adverse circumstances, trigger the deterioration in market sentiment towards the United Kingdom the minutes said. The deficit narrowed as a percentage of the economy in the fourth quarter after matching its record high in the previous three months. But for 2014 as a whole, the shortfall widened to 5.5 percent of GDP, the largest deficit since records began in 1948.
Price discounting drove growth in all of the euro zone's major economies in March, helping business activity increase at its fastest rate for nearly a year. New orders came in at their fastest rate since May 2011 and the survey found that companies have now been cutting prices for three years, although not as sharply in March as before.
Nevertheless, the Markit survey provided some welcome news for the European Central Bank (ECB) just weeks after it embarked on a trillion-euro asset-purchase programme. The private sector in Germany, Europe's largest economy, grew at its fastest pace in eight months and although it also increased in France expansion grew at a slower rate. Italy's service industry also returned to growth, fuelling hopes of an economic recovery there after years of on-off recession, and Spain's expanded at its fastest pace since August. This is very positive news for the Eurozone and could be a sign that the troubled economy is on the road to recovery.
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