While CBI members fear a strong pound may damage an export-led recovery, the City doubts the validity of new EU figures showing a widening of the UK trade gap.
- Producer price inflation for all manufactured goods in the UK rose from 3.6% in November 1993 to 4% in December 1993. Excluding food, drink, tobacco and petrol, which were affected by the November budget, producer prices fell from 3.1% to 2.9%. The recent strength of sterling has also helped cut the cost of imports of fuel and raw materials.
- CBI members fear that a strong pound, particularly against other major European currencies, may damage an export-led recovery. Many CBI members favour an early cut in interest rates, both to hold down the pound and to minimise the impact of recent tax increases.
- Parts of UK manufacturing are still struggling. Commercial vehicle output was down more than 20% last year, and output of machine tools in the 12 months to November 1993 was down by nearly 12%.
- West German gross domestic product fell by 1.9% last year. East German GDP grew by 6.3%, giving a pan-German figure of -1.3%. This compares with a UK figure of 2% growth in 1993. Economic expansion among Germany's small and medium-sized businesses has fallen to a 10-year low and a recent survey showed trade federation members were close to panic.
- The trade gap between the UK and other countries in the European Union widened in October as imports exceeded exports by £206 million. The trade deficit with the whole world halved to £578 million although this figure has been fluctuating wildly. Since the beginning of 1993, trade within the EU has been measured from VAT returns rather than customs declarations. The accuracy of these new trade figures has been challenged by the City and some economists believe that imports from the EU may be grossly understated. Some EU imports may be recorded as non-EU imports, which may explain the differing trends.
- Unemployment in the UK fell by 47,000 in December, the fourth successive monthly fall. Comparable figures from the other countries show that unemployment levels continue to increase. Despite this, unemployment in Germany is still only half the level in France and Italy and 60% of the level in the UK.
- UK unemployment figures reveal that the gap between the North and South continues to close. In 1990 the rate of unemployment in southern England was 4.5% - in the North including Wales, Scotland and Northern Ireland it was 8%. At the end of last year, those rates were 9.5% and 10.4% respectively. For the first time in modern history, unemployment in the South East is above that of Scotland.