UK business confidence gets biggest boost since 1973

Optimism among U.K. manufacturers rose at its fastest rate since 1973 in the first three months of this year, according to a survey out on Wednesday.

The quarterly survey of 405 manufacturers by the CBI (a U.K. business lobbying group) found that over two-fifths of businesses were more optimistic about the business situation than three months ago. Only 8 percent were less optimistic.

The production line at the Jaguar Land Rover factory in Solihull, England
Oli Scarff | Getty Images
The production line at the Jaguar Land Rover factory in Solihull, England

"There are still bumps in the road ahead, with only a tepid recovery likely in the euro zone, the pound creeping higher and a rapidly evolving situation in Ukraine. However, expectations for growth in the coming three months are positive and manufacturers plan to significantly ramp up investment in the year ahead," said Katja Hall, CBI chief policy director, in a news release.

The survey was conducted between March 24 and April 9, during which time the pound averaged 1.21 euros and $1.66.

Around one-third of interviewees reported an increase in total orders and the same number posted a rise in output volumes. Firms were also upbeat about the next quarter, with growth expectations for domestic orders and output at the highest since the 1970s.

The survey's upbeat findings are further good news for Chancellor of the Exchequer George Osborne, who was criticized by the International Monetary Fund (IMF) for his austerity policies last year, which it claimed would impede the U.K's ability to grow its way out of stagnation.

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However, several positive indicators on the U.K. economy have subsequently come out, and the IMF has upgraded its growth outlook for the country twice this year already.

Earlier this month, IMF Chief Economist Olivier Blanchard said he had "clearly under-forecast" U.K. growth.

Read MoreIMF upgrades its UK growth forecasts again

"It is fair to say our forecast was too pessimistic, and indeed growth has been much stronger than we had forecast," Blanchard told journalists.

Also on Wednesday, official statistics showed public net borrowing—the gap between what the government spends and raises in revenue—fell to £107.7 billion ($181.0 billion) in the financial year ending March 2014. This was better than the £107.8 billion forecast by the Office for Budget Responsibility.

In the 2012/13 financial year, government borrowing was £7.5 billion higher at £115.1 billion.