Despite some hopeful forecasts of growth in the UK economy next year, there’s no good news coming out of some key sectors as the autumn of 2012 gets into full swing. Indications are that the UK economy could struggle to regain strength after dipping back into recession this year – UK manufacturing has fallen more than economists had forecast for August and the trade gap has widened.
Output from factories dropped 1.1% from July – when it rose 3.1% – according to the Office for National Statistics. A Bloomberg news survey of 25 expert economists placed predicted median growth of -0.7%. Overall industrial output fell half a percent which matched the forecasts of economists, with the goods-trade deficit widening as exports fell.
Out of 13 different categories in the manufacturing sector, 10 fell in August from July’s figures, two rose and one remained the same. Some economists blame this on longer than usual summer closures, such as transport equipment manufacturing which dropped 4.5%. The goods-trade deficit has also grown to £9.84bn, with exports dropping 4% and imports rising 4.5% – there was a surplus in services of £5.68bn in August leaving a trade gap of £4.17bn.
One economist commented; “The economy may still pull out of its recession in the third quarter, but a return to contraction in the fourth quarter cannot be ruled out… The underlying growth momentum clearly remains extremely weak.”
With key sectors such as manufacturing struggling, it’s no wonder that growth forecasts have been cut and the outlook remains sketchy for the business sector as a whole. Many small businesses will not only find themselves directly impacted by many of these factors but confidence will also be at a low. While the picture isn’t good, there’s still some hope that things will improve – small businesses just need to try and make the most of the funding opportunities and government schemes available to them in order to give themselves the best chance of growth possible.