British Manufacturing and Exports on the Rise; Pound May Crush Imports
Analysts believe several factors are now coming together to rekindle the British economy, and manufacturing is at the top of the list with confidence soaring as companies return to top production rates.The Times notes, “Confidence among manufacturers is at its highest level since the 1970s as Britain’s economic recovery continued to gather momentum. In its latest snapshot of the manufacturing sector, the CBI, the UK’s largest business lobby group, found that in the three months to April, growth in total order books and domestic orders was the fastest since 1995.”
In the upturn of the recovery, specific British manufacturers are rising to meet the new market. The numbers show Associated British Foods Plc. in particular, is taking U.K. trade by storm.
According to Bloomberg News, “ARM Holdings Plc fell 3.3 percent after the semiconductor designer reported slower growth in first-quarter revenue from royalties. AB Foods (ABF) jumped the most in six years after saying that its Primark budget fashion chain will enter the U.S. Wolseley Plc advanced 1.6 percent after Credit Suisse Group AG recommended buying shares in the distributor of plumbing and heating products.”
Despite the growth, critics worry that the financial woes aren’t completely over, especially with the strengthening of the British pound.
The Global Post reports, “Britain’s economy is likely to weather the year-long rise in the pound even if some policymakers are worried that a further strengthening of the currency could hurt exports and frustrate a more sustainable recovery.”
While the strengthening of the pound may seem like a good thing for the British economy, it actually weakens the value of imports. Many British manufacturers rely on imports in the engineering of their exportable goods.
According to the Global Post, “British policymakers want the country to export more to narrow its trade deficit and make the economy less dependent on consumer spending. But the dependence of many manufacturers on foreign parts and raw material for their finished products may complicate that push.”
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