Export Week 2014: Service exports and manufacturing at ‘all time high’
Latest figures show UK was net exporter in February for first time in 12 months
The UK’s export economy is showing signs of growth during Export Week 2014, as recent statistics show the UK’s service export and manufacturing activity hit ‘all time highs’ across the start of the year.
The British Chamber of Commerce (BCC)’s latest Quarterly Economic Survey, based on a poll of around 7,500 businesses across the UK, found that export orders and sales in the services sector hit record highs across the first quarter of 2014, rising by 38% and 39% respectively compared to the fourth quarter of 2013.
More generally, the report found that “almost all” key indicators in the services sector remained above their 2007 pre-recession levels, pointing to an industry in increasingly rude health.
Additionally, the survey found manufacturing activity was also up, recording significant gains across several different indicators – including domestic sales and orders, employment expectations, investment in plant and machinery, and turnover confidence.
This growth in manufacturing was supported by the latest ONS statistics for February, which showed that production output rose by 1% over the month – an increase of 3.8% on the same time last year.
The BCC said this continued a trend seen over the previous three quarters where a spurt in manufacturing has led to consistent growth in the economy as a whole.
Whilst it cannot be directly linked to a growth in exports, the recent surge in manufacturing could be seen as indicative of a general rise in demand for UK products.
However, the body sounded a note of caution about the figures, saying “some concerns” still existed – whilst growth is strengthening in the short term, it argued the UK’s economy must become more “balanced” and less reliant on consumer spending in the long-term.
Additionally, the BCC said access to finance “remains a critical issue” for businesses as they look to meet growing order books, and argued rectifying this would transform the UK economy from being “merely good” to “truly great”.
Commenting on the results, BCC Director General John Longworth said: “Confidence is high and our members are determined to continue driving the recovery. We are brilliant at services and very successful at exporting our knowledge-based industries all over the world. This includes everything from accountancy and marketing through to literature and the IT sector.
“Access to finance and export support remain vital if we are to secure a truly great economic recovery.
“Only by repairing our broken business finance system will viable, growing firms gain access to the capital that will allow them to invest in their staff and machinery, and enter new markets.”
David Kern, chief economist the BCC, added: “While the share of manufacturing in the UK economy remains relatively modest, it is hugely important to our economic recovery, so it is pleasing that the sector is growing faster than total GDP.
“To build on these figures, it is important to reinforce efforts to broaden the recovery towards investment and exports. The Bank of England must strive to maintain an environment that boosts investment, with clarity on interest rates and action to keep inflation low. At the same time, the government must continue its efforts to boost access to finance for growing firms.”
In addition to the growth in exports, recent figures released by HMRC showed that the UK became a net exporter for the first time since last year across February, bucking a general five-year trend in which the country’s imports consistently exceeded exports.
The statistics showed that whilst both the value of imports and exports to non-EU markets decreased slightly across February compared to the previous month, exports exceeded imports by £0.1bn for the first time since the second quarter of 2013, for only the second time in a five-year period.
More generally, the extent to which the UK imports from non-EU nations has been coming down, with a 14% decrease in 2013 from the previous year and the trade gap closing £60bn between 2008 and 2013.
While it remains to be seen whether this trend is set to continue, the figures will represent a confidence boost for businesses during Export Week following shadow business secretary Chuka Umunna’s attacks on what he deemed the ‘failure’ of the coalition government’s initiatives designed to boost exports for small business.
Spearheaded by UK Trade & Investment (UKTI), Export Week is a week-long programme of events which aims to get 100,000 more companies exporting by 2020.