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| UK exports orders hit by sterling strength and eurozone crisis | UK exports orders hit by sterling strength and eurozone crisis |
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| Order books for UK factories have stagnated as the strong pound and the protracted weakness of the eurozone affect demand for British goods overseas. | Order books for UK factories have stagnated as the strong pound and the protracted weakness of the eurozone affect demand for British goods overseas. |
| The CBI said in its monthly health check of industry that export order books stood at their lowest in more than two years following a sharp fall in March. | The CBI said in its monthly health check of industry that export order books stood at their lowest in more than two years following a sharp fall in March. |
| Only 10% of manufacturers said their export order books were above normal for the time of year, against 35% who said they were below normal. The balance of -25 percentage points compares with -8 points in February. | Only 10% of manufacturers said their export order books were above normal for the time of year, against 35% who said they were below normal. The balance of -25 percentage points compares with -8 points in February. |
| Rain Newton-Smith, director of economics at the employers’ organisation, said: “Sluggish export performance seems to be a headache that won’t go away, with a still subdued eurozone and headwinds from a stronger pound. But measures in the budget to support exporters should be a welcome boost for the sector’s longer-term prospects. | Rain Newton-Smith, director of economics at the employers’ organisation, said: “Sluggish export performance seems to be a headache that won’t go away, with a still subdued eurozone and headwinds from a stronger pound. But measures in the budget to support exporters should be a welcome boost for the sector’s longer-term prospects. |
| “With emerging markets facing a tough time and uncertainty continuing to hang over the eurozone, firms are having to work even harder for opportunities to sell their products and services around the world.” | “With emerging markets facing a tough time and uncertainty continuing to hang over the eurozone, firms are having to work even harder for opportunities to sell their products and services around the world.” |
| The CBI industrial trends survey is the latest piece of evidence to suggest that the economy is growing less quickly than it was in the second half of 2014. | The CBI industrial trends survey is the latest piece of evidence to suggest that the economy is growing less quickly than it was in the second half of 2014. |
| Overall, order books fell from a balance of +10 points in February to zero in March, while fewer firms said they had expanded output in the last three months. Stocks of unsold goods increased. | Overall, order books fell from a balance of +10 points in February to zero in March, while fewer firms said they had expanded output in the last three months. Stocks of unsold goods increased. |
| Paul Hollingsworth, UK economist at Capital Economics, said: “Looking ahead, it is clear that exporters will struggle to make headways given sterling’s appreciation and the weakness of demand in the eurozone. | Paul Hollingsworth, UK economist at Capital Economics, said: “Looking ahead, it is clear that exporters will struggle to make headways given sterling’s appreciation and the weakness of demand in the eurozone. |
| “Indeed, note that sterling has risen by almost 8% since the start of the year against the euro. 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 re-gain some momentum over the coming quarters.” | “Indeed, note that sterling has risen by almost 8% since the start of the year against the euro. 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 re-gain some momentum over the coming quarters.” |
| Howard Archer, chief UK economist at IHS Economics said the CBI survey was disappointing, although the weakness was concentrated on export demand. | |
| “The outlook for manufacturers should remain decent on the domestic demand front, although they will be wary that any sustained political uncertainty around May’s general election could hamper activity. Elevated consumer confidence, markedly improved consumer purchasing power and rising employment should underpin demand for consumer durable goods.” | |
| “On the export front, UK manufacturers will be fervently hoping that the eurozone can build on recent signs of improving growth and this increasingly translates into increasing demand for UK manufactured goods.” | |
| The problems in shifting the UK economy to export-led growth were highlighted as the head of the government’s fiscal watchdog was questioned by MPs about its forecast for the public finances. | |
| The Office for Budget Responsibility made radical changes to its public finances outlook last week after the chancellor George Osborne used his pre-election budget to scrap plans that would have meant the biggest squeeze on public spending since the 1930s by the end of this decade. | |
| The chancellor now plans deeper cuts in the nearer term, which, along with a windfall from the sales of some government assets, will allow him to raise spending in 2019-20. | |
| The OBR predicts day-to-day public spending on public services will now be £28.5bn higher for 2019-20 than it had pencilled in at the time of the autumn statement in December. But it is warning this will mean a tighter squeeze on spending until 2018-19. | |
| The chancellor has rejected the OBR’s assessment that there will be a rollercoaster of deep cuts in the next Parliament. | |
| Questioned by MPs OBR chairman Robert Chote defended the organisation’s analysis: “If you carry out this exercise it shows in 2017-18- and 2018-19 larger real cuts year on year.” | |
| Chote said the OBR had improved transparency about public finances analysis since its creation five years ago. |