Exporters take heart from rate cuts and pound's fall, says survey

Interest rate cuts and the sinking pound gave exporters the biggest boost to confidence in more than six years in the run-up to Christmas, a survey shows today.

In the first signs that some of the gloom is lifting from manufacturing, over half the firms contacted by Dun & Bradstreet reported that they expected to increase exports.

Manufacturing output is stagnant, according to the latest official figures. But the Dun & Bradstreet survey shows firms are increasingly confident that the next few months will be brighter. Six out of 10 firms expect sales to rise over the next three months.

'Successive interest-rate cuts coupled with the fall in sterling have helped to bolster confidence, at least in the short term,' said Philip Mellor, Dun & Bradstreet's senior business analyst. 'However, it is far from certain that confidence will remain at current levels once rates have stabilised.'

But the proportion of firms planning to hire more staff over the next three months has fallen slightly, suggesting unemployment may resume its upward march this year.

A separate report from an independent forecasting centre suggests the economy will benefit more from the launch of the euro than the countries which have joined Economic and Monetary Union.

In a report today, the Centre for Economic and Business Research says the economy will grow by an extra 0.1 per cent in 1999, thanks to the euro.

The increased growth will be entirely due to the City capturing the lion's share of business in the euro. London's economy could grow by as much as an extra 0.5 per cent because of trading in the currency, the report said.

The survey confirms that optimism in London is the highest in the UK. But while overall confidence has risen, there are still black spots around the country where gloom outweighs optmism.

Businesses in the West Midlands are the most pessimistic, with most believing exports will fall or stay flat.

However, a separate survey conducted by the West Midlands Chambers of Commerce revealed that, even there, the slump in optimism has bottomed out. The number of firms expecting an increase in turnover over the next three months has stopped falling, stabilising at just over a third.