Spending Cuts Will Damage British Industry, Say UK Exporters
The UK government’s austerity drive threatens British industry, according to a survey of UK exporters. The Travelex Confidence Index (TCI), which slumped seven points in September, found that 63% of UK exporters think spending cuts and tax hikes will have a negative impact on British industry over the long term.
Exporters join a band of British businesses warning against the Conservative-Liberal Democrat coalition’s raft of spending cuts and tax hikes. Company directors expect the fiscal squeeze to heavily impact on domestic demand and force job losses across industry sectors.
David Sear, global managing director at Travelex Global Business Payments, said: “Spending cuts and tax hikes are likely to crimp economic activity for the foreseeable future and suggest that the UK’s impressive rate of growth will not be sustained over the second half of 2010. This climate will make it extremely difficult for exporters to continue driving the recovery.”
Exporters and importers in the manufacturing sector fear that they will be hit hard by the coalition’s fiscal squeeze, with over half (53%) saying that fiscal tightening will harm British manufacturing. Tax hikes are expected to hit the sector as domestic demand falls in the wake of fiscal tightening and up to 2.6 million employed in the sector are also under threat from public spending cuts.
Sear said: “It’s worrying to see confidence in the sector at such a low. Our ultimate concern is the impact the UK fiscal squeeze and the global slowdown will have on UK exporters over the long term.”
The decline in importer and exporter confidence came despite the recently upbeat figures from the TCI, where a strong gross domestic product (GDP) figure in 2Q10 had helped to bolster faith in the economic recovery.