UK exports at their highest since recession, say firms

• Survey finds growing confidence as sales rise
• Official data expected to show growth accelerating

UK exports are at their highest since the recession, according to a survey out on Tuesday that will fan hopes the economic recovery is picking up pace.

Activity has picked up, exporters are more confident about sales growing and more expect to hire staff this year, according to a report from the British Chambers of Commerce (BCC) and postal group DHL. The news comes ahead of official data on Thursday expected to show overall economic growth accelerated in the second quarter of the year to 0.6%, from 0.3% in the first three months.

Tuesday's report suggests exporting activity is at its strongest since the BCC/DHL trade confidence index began in autumn 2007.

That will bring some cheer to George Osborne. The chancellor has been espousing a rebalancing of the economy towards manufacturing and exports but the official data has yet to show any evidence of such a shift.

The BCC said that for the first time its survey results were positive "across the board" and that manufacturers and services firms were enjoying rising demand.

"Export sales and orders have gone up, confidence is high and expectations around profitability have increased. Even more businesses have taken on staff this quarter, with many expecting to hire again next quarter," said the BCC director general, John Longworth.

The survey of more than 1,700 businesses suggested export orders for services firms were growing at a record pace while manufacturers were enjoying their strongest orders growth for more than a year.

The BCC calculates its exporting activity index from the volume of export documents it issues to businesses and said the measure had risen 2.8% from the first quarter and was 2.9% higher than in the same quarter last year.

More than half of exporters (51%) believe that their profitability will increase this year, and 60% believe they will see an increase in turnover.

In its latest release on UK trade, the Office for National Statistics said the value of UK exports had remained flat since mid-2011.

Most economists said the official data showed little sign of the desired rebalancing toward net trade.

Longworth said that despite the BCC's findings there was still more the government could do to help companies sell overseas, including giving more support to those going to trade shows.

"We mustn't 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 to diversify into new markets," he said.

A container ship leaves Southampton: the survey of more than 1,700 businesses suggested export orders for services firms were growing at a record paceWhile the official GDP data this week is expected to show some pick-up in growth, economists have warned that the second quarter news from manufacturers was mixed, while the squeeze on incomes is likely to have weighed on consumer spending and will continue to do so over the rest of the year. Inflation has outstripped average wage growth for more than three years.

But business surveys have generally been upbeat and the Bank of England did not feel the need this month to step in with more quantitative easing.

A separate report on Tuesday suggests fewer businesses are struggling to stay afloat, with the number of insolvencies falling in June. The measure recorded an annual fall for the second month running to 1,560, down from 1,675 in the same month last year, according to credit data specialist Experian.

The majority of UK regions -- eight out of 11 -- showed continued improvement with a drop in their insolvency rate and Scotland had the lowest rate overall. Small to medium sized businesses, which suffered the most during the recession, performed well in June, Experian said.

"This is good news overall – we've already seen several months of low but level insolvency rates and the fact they have come down further indicates that firms are operating with more confidence than in recent years. However, as businesses start to think about growth and companies start to restock and rehire, the insolvency rate could well go up as cash flow becomes an issue," said Max Firth at Experian business information services.

Article Source : http://www.guardian.co.uk

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Mark Carney urged to kick start lending to small businesses

BBC ask Carney, who takes over from Sir Mervyn King today, to help sustain economic recovery by supporting small enterprises 

Business leaders urged Mark Carney on Sunday to back a £1bn investment bank at his first meeting as governor of the Bank of England to kickstart lending to small businesses.

The British Chamber of Commerce (BCC) also called on Carney, who takes over from Sir Mervyn Kingon Monday, to inject further funds into the economy as part of its quantitative easing (QE) programme to maintain the UK's fragile recovery.

BCC director general, John Longworth, said Carney needed to find ways to channel money to manufacturers and smaller enterprises or risk the recovery running out of steam.

"While we are seeing signs of a stronger recovery across the business community, we have no illusions about the challenges ahead for the UK economy," he said.

NEF spokesman Tony Greenham says Mark Carney’s arrival is the perfect opportunity to review the remit of our central bank.The Bank of England's interest rate setting committee is expected to reject boosting QE beyond its current £375bn level at its monthly meeting on Thursday, despite the arrival of Carney amid a welter of expectations that he will spur his colleagues into action.

City analysts agree that the monetary policy committee will hold its fire until the publication of a review in August of its policies, which will broaden its remit and encourage committee members to adopt a more radical mix of initiatives.

A report by the Bank's officials into the prospects for rising prices is also likely to show inflation falling over the next two years, giving the MPC more leeway to boost QE.

The chancellor wants the committee to take a more active role in encouraging lenders to promote borrowing to the wider economy. He has already allowed the committee to adopt a more flexible view of how to meet the 2% inflation target.

A report by the CBI and the accountants Price water house Coopers into the health of the financial services industry appeared to support the view that the banking sector is returning to health. It found that banks recovered strongly in the three months to the end of June after long period of cost cutting following the 2008 crash, though with lower profits and further cuts in employment.

However, the BoE's own figures show that RBS and Lloyds have reduced the amount of money they lend to households and businesses, while Barclays has threatened to cut back following demands from the main City regulator that it must bolster its reserves. Meanwhile the Co-op, which until earlier this year planned to take over 600 Lloyds branches, is in trouble after discovering a large shortfall in its capital reserves.

A funding for lending scheme designed to cut the cost of borrowing has pushed down the cost of mortgages since it was launched last year, but has so far had little effect on business lending.

A leading thinktank called on Carney to bypass the main banks with a direct intervention into the housing industry to support the building of 60,000 homes.

The New Economics Foundation said that instead of using quantitative easing to buy government bonds, the BoE should buy assets that will directly support the economy, which would mean purchasing bonds to support home building and energy efficiency, infrastructure projects and small business lending.

A foundation spokesman, Tony Greenham, said: "It's time for the Old Lady of Threadneedle St to get some new clothes. Mark Carney's arrival at the Bank of England is the perfect opportunity to review the remit of our central bank.

"Measures like QE and funding for lending are not providing the investment boost our economy clearly needs. Strategic QE can enable the Bank of England to maintain independence and control over inflation whilst more effectively supporting the government's economic objectives."

Greenham said Carney should adopt a new monetary allocation committee that would redirect central bank funds for investment in green projects and house building.

Like the BCC, the thinktank also backed funding for an investment bank.

"The funding for lending scheme uses public money to give cheap loans to banks to persuade them to lend to small businesses. Strategic QE could make loans to a British Business Bank, set up specifically to support lending to SMEs.

"Capitalising the green investment bank and British business bank so they could reach a scale similar to the investment banks of our major competitors like Germany, Brazil and Scandinavia would be a good place to start," Greenham said.

Article Source : http://www.guardian.co.uk

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