Chancellor has to admit Britain isn’t exporting enough goods
GEORGE Osborne yesterday admitted that Britain does not export enough after orders from overseas fell at the fastest pace for more than two years.
The Chancellor, who looks set to miss his target of doubling exports to £1trillion by 2020 to strengthen the economy, said the UK must earn its way in the world once again.
His comments, in a live television debate, came as a report showed the country’ s manufacturers have been hit by the strong pound and weak demand for British-made goods in the ailing eurozone.
The CBI said orders from UK factories stagnated in March after the biggest slump in new business from overseas since January 2013.
Analysts blamed the strong pound – which has risen more than 6pc against the euro this year – and the economic malaise in the single currency bloc. ‘Sluggish export performance seems to be a headache that won’t go away, with a still subdued eurozone and headwinds from a stronger pound,’ said Rain Newton-Smith, director of economics at the CBI.
Challenged over Britain’s poor trade record, Osborne said: ‘We don’t export enough. It is not the big companies in Britain that struggle to do that. It is the small and medium-sized companies.’
The Chancellor added: ‘We are a great trading nation. It is part of our history and heritage. I want to make it part of our future.’
Osborne used his 2011 Budget to declare Britain would be ‘carried aloft by a march of the makers’ but the rebalancing of the economy away from debt-fuelled domestic consumption towards exports has stalled. Official figures show exports of British goods and services fell by nearly 2pc last year to just under £508bn – a long way short of the Government’s £1trillion target. Sales of goods to the European Union were down 4.5pc while sales to the rest of the world were down 4.8pc. Despite the disappointing export performance, the CBI survey of 468 manufacturers found 32pc saw output rise over the past three months compared with 22pc that said it fell. The rounded balance of plus 11pc was well above the historical aver- age of plus 3pc. But 35pc said export orders were below normal while just 10pc said they were above normal, giving the weakest reading since January 2013.
Paul Hollingsworth, UK economist at Capital Economics, said: ‘It is clear that exporters will struggle to make headways given sterling’s appreciation and the weakness of demand in the eurozone. But with lower oil prices set to continue to provide a boost to manufacturers through lowering their input costs, and the domestic recovery to maintain a robust pace, we still expect growth in manufacturing output to regain some momentum over the coming quarters.’
A net 22pc of manufacturers said they expected output to grow in the next three months, down from plus 25pc in February but well above the average of plus 7pc. Howard Archer, UK economist at IHS Global Insight, said the survey was ‘disappointing’ but the ‘weakness is very much concentrated in export demand’.