The World Economy’s Sluggishness Pulls Down UK Manufacturing and Exports
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The UK’s massive export industry is seeing dicey times, with minor periods of apparent revivals quickly dampened by a pessimistic outlook from foreign and domestic economic bodies. The Confederation of British Industry (CBI) dragged the skeleton out of the cupboard and asserted that the weak global economic outlook is pulling down UK exports, and the situation is likely to persist.
The UK’s massive export industry is seeing dicey times, with minor periods of apparent revivals quickly dampened by a pessimistic outlook from foreign and domestic economic bodies. The Confederation of British Industry (CBI) dragged the skeleton out of the cupboard and asserted that the weak global economic outlook is pulling down UK exports, and the situation is likely to persist.
A study of the export order books pertaining to the biggest exporters in the UK for the month of November of 2014 indicates that the lull in the world economy, and more noticeably in the Chinese economy, has caught up with exports in the UK. The sluggishness of the Eurozone economy, coupled by the dip in demand for UK manufactured products in the global markets are being touted as critical factors that are casting gloomy shadows in the near future for UK exports.
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Negative Results Continue to Worry UK Exporters
The CBI studied the export order books of the prime exporting firms in the nation and questioned the authorized personnel and sales directors of these firms. Whereas just 17% of them claimed that their export orders for November were above normal levels, 34% noted that their exports were below normal.
The net negative 17%, although better than October’s net negative of 23%, clearly shows that the string of negative results is not yet over. Of the 18 major sub-sectors from the UK exports industry, as many as 15 reported export order levels lower than normal, with mechanical engineering firms reporting the worse results as export orders plummeted to a 2-year low for that particular market.
Sluggish Exports Worsening the Snail-Paced Economic Recovery in the UK
The weak performance of the UK export industry is a massive concern for the UK economy as a whole. The trade deficit for the UK economy is widening without much improvement. The dismal figures of trade deficit jumped from £9bn in August to £9.8bn in September.
Exports to the troubled Eurozone and increased oil imports have crippled measures to lessen the trade deficit, the cumulative result of which has been the dismal portrayal of UK’s economic future in October 2014 to December 2014 quarter. Analyst bodies in the UK have already remarked that the strain was, in all likelihood, going to continue.
Will the doldrums of the export industry invoke dire consequences?
Wait and See
Reports from the Office for National Statistics, amidst all the economic pessimism, have brought to light some noteworthy facts. The expenditures of UK businesses within the research and development category have not seen a dip. In fact, they have grown from 2012 onwards, with 2013 spending recorded at £18.4bn, an 8% increase over the 2012 figures. This matches an 11% increase in the R&D workforce across the nation. Though the R&D expenditures within UK businesses have stood firm against the stormy economic outlook from 2013, anemic export numbers may force executives to cut their spending on innovation.
