A strong pound and turmoil in the eurozone have left British manufacturers feeling gloomiest for almost four years on demand for exports, according to a business survey.
In the latest evidence that exporters are facing a number of challenges, the CBI’s latest quarterly snapshot of manufacturers suggested new overseas orders picked up in the three months to July but that the outlook is gloomier. It highlighted the rise in sterling, which continues to make UK goods more expensive to overseas buyers.
The poll of 445 companies showed 26% of manufacturers expect total new orders to increase over the coming quarter, compared with 18% that expect them to decrease. The resulting net balance of +8% is the lowest since October 2012.
The big drag on order expectations comes from exports rather than domestic sales, with more manufacturers expecting a drop (28% of them) in overseas orders than those that expect a rise (21%). The resulting balance of -7% is the lowest since October 2011.
In addition to the stronger pound, which earlier this month hit a seven-and-a-half-year high against a basket of other currencies, companies also cited unhelpful political and economic conditions in some export markets.
“Manufacturers are continuing to feel the pressure from the stronger pound. Greater buoyancy in exports remains a missing element from the UK’s recovery,” said Katja Hall, CBI deputy director general.
“The EU remains our largest trading partner, so while the UK economy’s direct exposure to Greece is minimal, we must encourage all leaders to act decisively to preserve growth and stability throughout the eurozone.”
Despite the export worries, more firms expect to raise employment than cut it over coming months, the survey suggested.
