Do rising UK exports signal the rebalancing of the economy ?

Exporters are feeling chipper.

The latest survey from the British Chambers of Commerce and DHL shows confidence back to pre-crisis levels. Orders are up and firms say they will take on extra staff to meet demand from overseas.

If this is the much-heralded rebalancing of the economy in action, then it's not a moment too soon. The latest data from the World Trade Organisation shows that not only did the UK continue to struggle when it came to exports of goods in 2012, but exports of services – a long-standing strength – were also down.

There are two reasons why the export outlook could be improving. The first is that UK companies are benefiting from a weak pound, which fell sharply in 2007-09 and has been under fresh pressure in recent months.

The second is that it has proved tough to sell domestically at a time when the real incomes of consumers have been falling, so firms have started to look at faster-growing markets overseas.

A third reason for optimism would be that growth in the rest of the world economy is picking up. This, though, is the missing piece of the jigsaw. If anything, global growth seems to be slowing rather than accelerating, which makes talk of an export-led recovery a tad premature.

Powered by article was written by Larry Elliott, economics editor, for on Tuesday 23rd July 2013 00.01 Europe/London © Guardian News and Media Limited 2010


image: © Foreign and Commonwealth Office

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