UK economy gathers pace as exports boom

23rd July 2013

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The UK’s economic recovery is gathering further momentum with exports hitting their highest level since the recession writes Philip Scott.

According to the British Chambers of Commerce and DHL ‘export index’, exporting activity is at its highest level on record since 2007, as orders for service sector businesses increased for 50 per cent of firms.

In addition some 44 per cent of manufacturing firms increased their export orders resulting in the highest figure since the first three months of 2012.

Responses from more than 1,700 businesses show that export orders and sales have increased, with confidence levels in both future turnover and future profitability also remaining high. More businesses have taken on new staff and many expect to hire more over the coming months.

The ‘export index’ figure is calculated from the volume of export documents issued to businesses by Chambers of Commerce, which now stands at 118.12. This represents an increase of 2.85 per cent from the first three months of the year and it is almost 3 per cent higher compared to the numbers recorded between April and June last year.

The survey also found that more than half of exporters, at 51 per cent, believe their profitability will rise this year, and 60 per cent believe they will see an increase in turnover.

John Longworth, director general of the BCC, says: “For the first time on record, these results are positive across the board. Export sales and orders have gone up, confidence is high and expectations around profitability have increased.

“But we must not take our foot off the gas. We still need more companies to take the plunge on international trade and for those who export already, to try and diversify into new markets. For this to happen, businesses need real, on the ground support to help them take their goods and services overseas. We must seize this momentum and strive towards an economy that is more than just ‘ok’, but which is truly great and outperforms our competitors.”

All eyes will now be the UK’s economic growth, or GDP data, for the second quarter of the year, which are published Thursday. The UK narrowly avoided slipping back into recession by expanding 0.3 per cent in the first three months of the year. Some experts are optimistic economic growth will have doubled in the second quarter.

Howard Archer, Chief UK & European economist at IHS Global Insight, says: “We expect GDP growth to have doubled to 0.6 per cent quarter-on-quarter. This would cause year-on-year growth to accelerate to 1.4 per cent in the second quarter from 0.3 per cent in the first, which would be the strongest annual growth rate since the first quarter of 2011. Furthermore, we believe it is very possible that growth could have been even stronger than 0.6 per cent in the second quarter.”

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