Manufacturing outperformed the economy as a whole in the final quarter of last year as Britain finally emerged from the most severe recession since the 1930s.
Figures released yesterday from the Office of National Statistics, showing the economy as a whole grew by just 0.1% in the final quarter, disappointed the City, but manufacturing did rather better, posting a gain of 0.4%.
Lee Hopley, chief economist at manufacturers’ organisation the EEF, said the sector had been buoyed by a steady increase in exports over the last few months. “We’ve really seen a turnaround in manufacturing exports,” she said. The EEF is forecasting sluggish growth for the British economy this year, but engineering firms may find markets abroad more positive. “Certainly the prospects in global markets are looking rather better than domestic ones,” Hopley said. According to the EEF’s outlook for 2010, growth in export markets will be supported by an upturn in global trade flows and weakness of the pound.
Hopley added that there was “some concern” that manufacturing’s relatively strong end to the year would be short-lived as stimulus measures such as the UK car scrappage scheme and similar programmes abroad came to an end. Germany’s successful scheme, which boosted new car registrations in the country by more than 20%, has already finished. “There is some concern that the upturn of activity in the final quarter came at the expense of the first quarter of this year,” Hopley said. Analysts believe that it is unlikely governments across Europe will have the finances to resurrect car scrappage schemes in 2010, as the industry endures another tough year. However, the EEF is forecasting that the chances of a double-dip recession at home and abroad are minimal.
Recent analysis of HM Revenue & Customs data by NatWest and the Royal Bank of Scotland indicated that the value of British exports increased by £723 million between the second and third quarters of last year, the two banks said. The average value of goods sold abroad also rose by more than £60,000.
NatWest and RBS said they had launched a new package for exporters to help them “maximise opportunities for future growth”.
© PE Publishing, 27 January 2010
