UK Trade And Production Output Fell In August 2013

New figures released by the Office for National Statistics (ONS) have shown trade and production output dropped in August 2013.

Total production activity fell by 1.1 per cent when compared with the previous month and manufacturing decreased by 1.2 per cent over the same period. On a year-by-year basis, overall output was down by 1.5 per cent.

This brought an end to an impressive spell of growth, causing some UK businesses to question the strength of the economic recovery.

According to the ONS, the main reason for the downturn was a lull in the manufacturing of pharmaceutical products, computers, electronics, food, beverages and tobacco.

The British Chambers of Commerce (BCC) conceded that the latest figures were a disappointment, but urged small and medium-sized businesses (SMEs) not to panic.

Chief economist at the organisation David Kern said monthly figures "can be erratic" and do not always tell the entire story.

"The more meaningful three-monthly comparisons support our view that the UK economy is on course to record strong growth in the third quarter of 2013," he commented.

Many SMEs have found it hard to expand since the global economy collapsed in 2008-09, with banks and lenders tightening borrowing criteria.

There have been numerous signs to suggest the economy has started to gather momentum in the second half of 2013 and Mr Kern thinks confidence levels are currently high among businesses.

"We know from our survey that many firms are enthusiastic, confident and looking to expand and drive the recovery, as long as there is a supportive environment that fosters enterprise," he continued.

However, the BCC economist warned that SMEs cannot afford to become complacent.

He is particularly concerned about the lack of diversity in the nation's export options. Although there have been slight improvements of late, "the pace of rebalancing towards net exports is still inadequate", Mr Kern believes.

It is important, he insisted, that the government continues to help companies to find new export markets.

Expert Opinion

We agree with the British Chamber of Commerce that this is not the time to panic. These latest results are an important reminder that the recovery is still at an early stage and that we cannot be complacent and just assume that long-term sustained growth is guaranteed. <br/> <br/>“What is certain is that SMEs are central to the UK’s economic growth. It is also true that the Government needs to support businesses so that the entrepreneurial spirit that exists in this country can be converted into business success and the creation of jobs. This requires support and innovative initiatives which enable and encourage organisations to produce goods and be competitive in the global market. <br/> <br/>“Any attempts by the Government to reduce red tape must be stepped up also This is important so that bosses of small and medium-sized firms can focus on what they do best and capitalise on positive sentiment that still exists.” <br/> Steven Beahan - Partner