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08:37 on Wednesday
7 March 2001

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Buoyant business outlook signals more interest rate misery for exporters


The most buoyant business outlook for two years will signal further interest rate rises and bring additional problems for exporters according to local company directors.

The Eastern Region of the Institute of Directors says its latest business opinion survey shows improvements in company performance, business optimism and employment growth.

Even the hard-pressed manufacturing sector shows significant gains over the last survey in December, although it still under-performs the economy in general.

However, local directors expect interest rates to peak at 6.5 per cent which, together with the increases in public sector spending announced in the Budget, will prolong the grief being suffered by exporters because of the strength of Sterling.

IoD Eastern Branch chairman David Jennings said: "The latest survey is very bullish and is the strongest for over two years, although seasonal factors, especially in the construction industry, may have boosted some of the results.

"The improvement in orders, especially among exporters, is very encouraging and even the manufacturing sector has picked up, although it is still under-performing the rest of the economy.

"Although price inflation is benign and pay settlements remain modest, costs have risen for the third consecutive quarter. Increases in public sector spending announced in the Budget will underpin the strength of sterling for some time which will exacerbate the difficulties being faced by exporters unless they take advantage of growing markets."

The IoD, which subtracts the number of negative responses from positive answers to produce a balanced total, reveals significant improvements for companies in both the South region which includes Cambridge and the Midlands region which includes Peterborough.

Asked about company performance, 89 per cent of directors in the Peterborough region and 86 per cent in the Cambridge region said they were ding well compared with a national figure of 87 per cent.

The Peterborough region registered a particularly large rise in company optimism with a balance up from +32 per cent last quarter to +50 per cent this time. Optimism in the Cambridge region rose to +61 per cent against a national figure of +57 per cent.

The balance of directors reporting above normal orders was also high in both the Peterborough and Cambridge regions - both up by 20 per cent on the last quarter to +40 per cent and +36 per cent respectively.

April 2000

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