Britain Will Have To Increase Exports

It\’s common knowledge that Britain, like most of the world, is having financial problems at the moment. A new report from a team of economic forecasters at Ernst & Young says that the UK is facing a decade of readjustments away from consumer spending. The report said that Britain will need to start focusing on increased exports rather than the spending that comes from consumers.

This may be a very difficult transition for local firms that have dealt with domestic customers for many years. They will have to look to overseas markets to try to meet their current sales targets. Peter Spencer, a special adviser from Ernst & Young, said that Britain had been relying on the domestic consumer for almost ten years and that it would not work anymore. The team\’s report went on to say that the UK would have trouble reaching even 1% growth in 2010. These are not very exciting numbers for many market analysts.

Spencer went on to say that domestic spending couldn\’t continue at the rate at it had in recent years. The Ernst & Young Item Club report also said spending in the country would increase by less than 0.5% in 2010. These are very low numbers compared to most of the last 20 years. They suggested that it could be very difficult but that firms could grow their global exports in 2010 with a lot of \”energy and enterprise\”

The success of many UK businesses was dependent on exports but the report said that countries like China weren\’t being targeted effectively. The UK had a high market share in many Asian countries but they are a very small player in China. Spencer suggested that this was an important region that the UK had to increase their market share in to ensure the future success of the economy.

The report by Ernst & Young suggests that exports will likely pick up in 2011. The Item Club report expects up to 10% growth by 2012 and even 9% in 2011, which will calm the nerves of many. In the short term things aren\’t looking so good. Official figures from late 2009 may show that the United Kingdom officially ended the recession but the report states that this was likely thanks to temporary measures rather than some kind of sustainable solution.

The report said that firm restocking, the car scraping program, and a lower VAT had kept the country afloat during tough times.

It was expected that after the side effects of these measures went away trouble would begin again.

At the same time as this report, Begbies Traynor issued more data saying that insolvencies were down in the final quarter of 2009 – as much as 15% lower than a year before. Begbies Traynor felt this could be another side effect of government measures after the recession.

Both reports showed that 2010 might be a tough year for the economy but that things could bounce back in 2011.

Learn more about consumer spending and IVAs by visiting Mike Garrett\’s website.