The UK’s private sector has shrunk for the eighth consecutive quarter.

That is according to data from the Confederation for British Industry, which said its latest snapshot of the sector showed “signs of green shoots” – with projections that UK industry will return to growth in the next quarter.

The organisation’s lead economist, Alpesh Paleja, said the expected return to growth was “encouraging” and supported other data showing some resilience in economic activity.

“But let’s be clear – at best, this illustrates an economy skirting stagnation-like conditions rather than delivering the strong, sustainable growth we need,” he warned.

Read more:
Analysis: Big shift in Bank of England thinking suggests economy showing signs of recovery
The key points in the chancellor’s budget
See if you are better or worse off after budget statement

The CBI data showed that activity in the UK private sector contracted by around 4% in the three months to March – the eighth consecutive quarter of decline, but the mildest drop since July last year.

The main driver was a weak services sector – the survey showed an 11% drop in consumer services volumes.

Distribution activity increased slightly while manufacturing contracted, albeit at a slower pace over the quarter.

Chancellor Jeremy Hunt announced plans to deliver growth in his spring budget, including increased childcare provision to help parents get back to work.

Click to subscribe to the Sky News Daily wherever you get your podcasts

The Office for Budget Responsibility (OBR) also confirmed the UK economy is on track to avoid a technical recession, which means two consecutive quarters of decline.

But Mr Palega said the UK is still facing “considerable economic headwinds”.

“Inflation remains stubbornly high and, while businesses and consumers can expect lower energy prices to feed through later in the year, the pressures on household budgets will weigh on consumer spending,” he said.

Related posts:

Mortgage borrowing takes largest monthly leap as economy finds new gear July inflation measure usually used to set annual rail fare rises is highest in ten years Travel hopes, retail slump, four-day week Treasury paves way to compensate Post Office scandal’s forgotten 555 Sub-postmasters who launched Horizon scandal legal fight secure extra compensation Bitcoin rallies slightly but still set for record losing streak Shapps to hold crunch talks with British Steel owner amid spectre of mass job cuts Global turbulence, retirement and bugs turning food waste into pet food Shapps steps up talks with British Steel-owner as job cuts loom Hunt insists reducing inflation ‘remains government’s focus’ amid global banking volatility COVID testing tsar Sir John Bell quits board of Oxford spinout vehicle OSE More Amazon strikes on the cards after ‘insulting’ pay rise