Can the UK economy depend on exports?
Today's revelation that UK exports are now running at significantly increased levels is a positive sign for the UK economy and one which is much needed. However, there are some concerns regarding the medium term strength of the UK economy, if as expected, sterling recovers at least part of its recent fall. This will then make UK exports less competitive and with commodity prices also rising the pressure on margins will grow.
The truth is that an improvement in UK exports in the short to medium term is likely to stabilise the operations of many UK businesses. Hopefully, by the time sterling recovers at least part of its recent losses the overall UK economy will be much stronger and business levels will have naturally picked up. Whether or not sterling does improve in the short to medium term is open to debate because the large UK budget deficit as well as government debts of £1.3 trillion are a major concern.
No matter which party wins at the next election we are likely to see an emergency budget within days and significant public-sector spending cuts within weeks. The makeup of the UK economy and government spending is set to change dramatically over the next few weeks.
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