UK Manufacturing and Exports to Assist with Recovery

A recent report stated the UK Manufacturing sector should see a slight improvement, offsetting the downturn in consumer spending.

The manufacturing sector is expected to grow from 11% to 15%, however the financial services sector to contract from 8% to 5%.

The report also states it expects a fall in the UK’s economic output next year, a trend that will be felt around the world.

The downturn of sterling will certainly help the export sector, companies are already looking to ‘cash in’, particularly the pharmaceutical and aircraft area. The manufacturing sector as a whole has witnessed a severe drop off, this has left the door open for a mini-revival.

Consumer spending is expected to underperform economic output, going forward government spending will need to be lowered to reduce the national debt. A full recovery is on the cards but it is a long way off yet.

The UK needs to work its way through this difficult period, the overall economy is set to contract by some 4% this year and 1% next.

In last week’s Budget, Chancellor Alistair Darling predicted that the UK economy would contract by 3.5% this year, but would grow by 1.25% in 2010, general consensus is, he is being overly optimistic

The IMF on the other hand expects the UK economy to shrink by 4.1% in 2009, and contract a further 0.4% in 2010.