The British Chambers of Commerce (BCC) has today published its Quarterly Economic Survey for Q2 2014. The results, made up of responses from 7,000 UK businesses, show that the economy is still strong and moving in the right direction, with many key balances higher than they were before the recession. Many of the balances for manufacturing and services are slightly down on the quarter, but this is following the unexpected surge seen in the first quarter of the year.

In manufacturing, three balances in the Q2 2014 Quarterly Economic Survey were at their all-time highs in Q2 2014: domestic sales (+42%), profitability confidence (+51%) and capacity utilisation (46%), showing that the manufacturing sector is continuing to strengthen - but this compares with six manufacturing balances at their all-time highs in Q1.

In services, there were no balances at their all-time highs in Q2, compared with two service balances at their all-time highs in Q1 (export sales and orders). All the export and investment balances fell in Q2, for both manufacturing and services. Despite these falls, Q2 export balances and most investment balances are still above their average 2007 pre-recession levels.

BCC Director General, John Longworth, says moderate declines of the pace of growth are 'unsurprising' given that the economy 'jolted forward' in the first quarter of the year. He applauds UK businesses for their continued 'dedication, confidence and resilience' but urges the Bank of England not to act prematurely on raising interest rates as this could 'limit the growth ambitions among the very firms we are counting on to drive the recovery'.

David Kern, Chief Economist at the BCC, said: "Although most key balances for Q2 are lower than the very strong figures seen in the first quarter, they remain high by historical standards. In our recent economic forecast, we predicted that quarterly GDP growth for Q2 would be 0.8%, with full-year growth of 3.1%. However, these results mean that risks of a downgrade have increased.

"The Q2 falls in all the export and investment balances act as a timely warning that although growth is stable, challenges facing our economic recovery still remain. Rises in sterling are making UK exports more expensive. Uncertainties around early interest rate increases are adding to the difficulties, and our excessively large current account deficit poses potential risks. UK growth cannot permanently rely on rising consumer spending, which is driven by a buoyant housing market, and on excessive household debt. Unless investment and net exports make bigger contributions to growth, the recovery could stall."