Top story

Economic growth held steady in the UK during the first quarter and is expected to gather momentum over the next three months, the CBI said this morning. The business lobby group’s Growth Indicator surveys 764 businesses from a range of sectors.

It found stronger growth in the distribution – made up of retail, wholesale and motor trades – and consumer services sectors in March, compared with the previous month. However, that was offset by a weaker performance in manufacturing – where 11 of the 18 sub-sectors reported slowing growth since February – and in business and professional services, where firms have been feeling the effect of stronger competition.

The overall reading of +18% for the three months to March showed that private sector growth was almost unchanged from the three months to February (+19%).

“The outlook for 2015 looks encouraging,” CBI deputy director general Katja Hall said. “Our surveys show it’s been a solid start to the year with the prospect of stronger growth to come. The benefits of lower oil prices should be increasingly felt; with cheaper petrol boosting households’ incomes and spending power, and cutting costs for many businesses.

“The main risk to the UK economy comes from the eurozone, with continuing wrangling over Greece’s bailout package stoking uncertainty. Plus, many businesses will also have to contend with a stronger pound weighing down on already weak export growth. ”

Morning update

It’s a very quiet morning on the London Stock Exchange following the Easter break, but elsewhere Kellogg has complained its profits could be hit by the international campaign to block big companies’ use of offshore havens. The warning about the clamp down on tax avoidance by the cereal maker is thought to be a first from a multinational, according to The Sunday Times. Kellogg said in its annual report that efforts to close loopholes could lead to a “material” rise in its tax bill. It follows the diverted profits tax coming into effect in the UK last week, which is designed to stop companies channelling profits overseas. It is part of a co-ordinated campaign against tax avoidance by the Organisation for Economic Co-operation and Development and the G20.

In 2013, UK consumers spent £622m on Kellogg’s products, buying more cereal per person than any other country in Europe. Kellogg’s two UK subsidiaries paid corporation tax of £8.4m on declared profits of almost £50m. However, this was offset by a tax credit worth £11.8m, recorded by another UK-registered Kellogg company. “Due to economic and political conditions, tax rates in various foreign jurisdictions may be subject to significant change,” the annual report said. It added: “Contemplated changes in the UK and other countries of long-standing tax principles if finalized and adopted could have a material impact on our income tax expense.”

In M&A news, Intertaste Food Ingredients this morning announced it has snapped up Caldic’s herbs, spices, dried vegetables and seasonings business in Belgium. Intertaste said the acquisition had “further strengthened” its position in the Belgian, French and Dutch markets. Caldic added the divestment allowed it to continue its focus on the rapidly growing food ingredient business.

Topics