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Will the services sector push the UK economy back to boom times?

Yesterday's news that growth in UK services sector has increased to levels not seen 2007 bodes well for the immediate future of the UK economy. The services sector, which takes in everything from finance to restaurants, is the engine room of the UK economy and has been the backbone of the UK for many years. They were initial concerns that the services sector did not appear to be picking up as quickly as other areas of the UK economy but these concerns have reduced after yesterday's news.

However, it is worth noting that the added tax liability on financial companies and others in the services sector will hold back the rate of growth in the short to medium term. The UK government needs to find a balance between encouraging investment, employment and increasing the tax take of the UK authorities.

This is a very difficult balancing act which will be vital to the short to medium term strength of the UK economy. If the government over taxes the business arena then growth will be slower than expected but if the government allows demand to run ahead then we could see inflation become a major problem.

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