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Britain's recovery loses steam

Wednesday, September 09, 2015 - 01:37

British manufacturing output fell hard in July, hit by an earlier than usual summer shutdown of vehicle production lines, and the country's trade deficit widened sharply. As Amy Pollock reports falling prices are also a concern.

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It's "business as usual" for Britain's Queen Elizabeth II. She's steaming ahead with official engagements as she becomes the country's longest reigning monarch. But the course of the UK economy looks less certain as she celebrates 63 years on the throne. Factory output fell hard in July as car makers shut down earlier than usual according to the Office of National Statistics. And exports dropped by more than 9 percent as the trade deficit widened. British manufacturers face tough conditions with a strong pound and weakening demand. World First's Jeremy Cook. (SOUNDBITE) (English) CHIEF ECONOMIST AT WORLD FIRST, JEREMY COOK, SAYING: "Exports simply aren't competitive at the moment with the level of the pound and the weakness that we're seeing in our main export markets, be it emerging or developing markets. It's only the U.S. where the UK can really export to, given the strength of the pound and given the strength of the U.S. economy." The service sector is not doing so badly though, helped by lower prices at the tills for the second month in a row. The British Retail Consortium says non-food goods fell by 2.4 percent in August, due to competition and falling commodity prices. Combine that with uncertainty over global growth and the Bank of England may decide now isn't the right time to hike interest rates after all. (SOUNDBITE) (English) CHIEF ECONOMIST AT WORLD FIRST, JEREMY COOK, SAYING: "I think they would be unwilling to get in the way of that by starting to hike rates, by starting to say to people, your mortgage is likely to go up. Deflation muddies the waters - it helps consumers, but it muddies the waters for policymakers." The UK's best known export may be centre stage. But policy makers are hoping her next few years on the throne are not marred by an economic downturn.

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Britain's recovery loses steam

Wednesday, September 09, 2015 - 01:37