Investment fuels hopes of economic 're-balance'

The Northern Echo: 'PLEASING INVESTMENT': Danny Alexander, Treasury Chief Secretary, has hailed business investment. He is pictured with Gary Dawson, managing director of Middlesbrough distribution firm AV Dawson, during a visit to the region last year 'PLEASING INVESTMENT': Danny Alexander, Treasury Chief Secretary, has hailed business investment. He is pictured with Gary Dawson, managing director of Middlesbrough distribution firm AV Dawson, during a visit to the region last year

A LARGER rise in business investment has fuelled hopes the UK economy is re-balancing, a report has said.

The Office for National Statistics (ONS) says investment increased five per cent, or £1.6bn, on the previous quarter to £33.4bn in the first three months of the year.

The results meant five consecutive periods of growth for the first time since 1998.

Bosses say the improvement, which indicates the UK is becoming less reliant on consumer spending, was responsible for half of the overall first-quarter GDP rate of 0.8 per cent.

The figure was left unchanged on earlier estimates as better construction output was offset by a downgrade in the services sector.

The annual quarter-on-quarter growth rate was slightly lower than expected at three per cent, but means GDP is now only 0.6 per cent below its pre-economic crisis level.

Treasury Chief Secretary Danny Alexander said: "Business investment tends to lag behind other indicators of recovery, so it's pleasing to see strong business investment growth of ten per cent over the year."

Spending was up 0.5 per cent in the quarter and was achieved without requiring households to put aside a smaller proportion of their incomes, the ONS said.

It added the savings rate increased slightly to 4.9 per cent from 4.8 per cent in the fourth quarter.

The account deficit, which shows the UK's trade in goods and services as well as income and current transfers, narrowed from the fourth quarter's £23.5bn, but it was still £18.5bn, equal to some 4.4 per cent of GDP.

The weakness reflects a fall in income from UK assets overseas, compared with income from foreign-owned assets in the UK, in the wake of the recent strengthening in sterling.

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