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Business services are 'lifeblood for growth'

Manufacturing is no longer big enough to sustain the economic recovery, with business services now the UK's "lifeblood", according to a new report.

The Work Foundation said "knowledge-based" business services such as law, accountancy and computers now account for more than a fifth of the country's economic output and 11% of employment.

The sector has replaced manufacturing as the mainstay of the UK economy and was integral to the country's prosperity, said the research group.

Around 1.8m jobs have been created in the sector since 1970, generating 38% of all growth in the UK economy, said the report.

Report author Andrew Sissons said: "As we've argued previously, manufacturing will continue to be hugely important for the economy but it is unwise to pin all hopes for recovery on this sector to the detriment of the UK's greatest economic strength.

"Like it or not, business services have become the lifeblood of the UK's knowledge economy and now account for twice the output of the manufacturing sector.

"The business services sector goes far beyond simple service provision and is much more than a spin-off from other parts of the economy. It supplies the professional and technological support that businesses depend on for innovation and growth.

"But if the sector is to continue to thrive in the face of growing international competition, it needs stronger links with universities, greater numbers of highly skilled workers and a steady supply of graduates. Policymakers need to get to grips with this before it is too late."