London, England. Picture: ISTOCK
London, England. Picture: ISTOCK

London — British businesses grew at the fastest rate in more than two years in the three months to February, despite uncertainty about Britain’s prospects as it prepares to leave the EU, the Confederation of British Industry (CBI) said on Sunday.

The CBI’s monthly growth indicator — based on surveys of how much businesses’ output has changed over the previous three months — more than doubled to +20 in February from +9 in January, reaching its highest since December 2015. Growth was far above the long-run average across most sectors other than retail, the CBI said.

The weak pound and healthy global growth propelled manufacturing output, while business and professional services grew at their fastest pace since August 2015.

"It’s good to see firm growth in the UK economy this month, and expectations of growth into the next quarter also look positive," CBI chief economist Rain Newton-Smith said. "However, both businesses and consumers continue to grapple with uncertainty over the economic outlook and Brexit, so the government must help counter this by intensifying its focus on the domestic agenda," she said.

The upbeat survey contrasts with modest GDP growth of 0.4% for the last three months of 2017.

Many businesses see the end of March as a crunch point for judging whether Britain can secure a transitional arrangement to preserve its EU trade arrangements temporarily after it leaves in March 2019.

Prime Minister Theresa May urged the EU on Friday to show more flexibility in talks on future ties, saying Britain was ready to swallow the "hard facts" of Brexit but did not believe they prevented a successful trade deal.

Sterling fell sharply after Britain voted to leave the EU in June 2016, and this is still being felt on the high street, where high inflation and sluggish wage growth has squeezed shoppers’ disposable income.

Retailers Toys R Us UK and electronics chain Maplin sought creditor protection last week, and the CBI said retail volumes declined for a fifth successive month in February. The CBI also said that uncertainty about Brexit had been restraining business investment, particularly larger projects.

Looking ahead, it expects the overall pace of private sector growth to accelerate in the three months to May — up to +24 — driven by a strong pick-up in the retail and motor trades, and forecasts overall growth this year to be similar to 2017.