This reinforces our view that the UK economy is showing signs of improvement and we will see acceleration in the rate of economic growth from the second half of the year.

Despite this, our expectation remains the same: the UK economy is showing signs of improvement and we will see acceleration in the rate of economic growth from the second half of the year.

The latest minutes from the Bank of England’s monetary policy committee suggest that we could see further round of quantitative easing towards the middle of the year. As well as trying to ease credit conditions, this is also likely to further weaken the pound and therefore provide a boost to export growth, which has been one of the Government’s main economic priorities.

Recovery will likely arise from business, not consumer spending

Survey data from the corporate sector shows that large companies are showing more optimism than they have been over the last 18 months. An improvement in sentiment will encourage firms to release cash from their balance sheets and invest in new plant and machinery, research and development, and recruitment.

However, inflation, which had been forecast to reduce towards the end of the year, is now expected to remain higher through 2013 and into 2014 than previously thought. This means a slow down in real income growth in 2013 in comparison with 2012, which will have knock-on effects for retail sales and consumer spending.

Consequently, the recovery will be less focused on consumer spending than previously thought and more oriented to business investment and the export market. As previously though, the risks are still oriented towards the downside and relate primarily to the well publicised macroeconomic risks; the jobs market, which is expected to weaken this year, as the February employment figures have started to show; and levels of consumer debt, which remain elevated.

Property investment: volume is up, but number of deals is down

Our latest numbers from our UK Investment Transactions report show that total commercial property investment volumes increased by 8% to £8.05bn in Q1 2013 in comparison with Q1 2012. Despite the increase, the number of deals shrank to a cyclical low; meaning that the average deal size reached a new peal at £28m, reflecting the continued investor demand for portfolios and large lot sizes.

For the last 18-24 months, Central London offices have been the driving force behind the market and they accounted for almost 40% of the investment volume in 2012. However, Q1 saw a slow down and investment dropped by 25% in comparison with Q4 2012. Pricing on the prime assets remains very keen though and the drop is down to a lack of available stock rather than lack of demand.

Take-up skewed by Google deal

In the office occupier markets, our data shows that take-up also increased in the first quarter of the year in comparison with Q4 2012. However, this was solely down to the Google deal at Kings Cross Central, where they have agreed to build a new 725,000 sq ft office complex, which will house their UK headquarters from 2016 onwards.