Export boom for British manufacturers as foreign orders reach six-year high

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Exporters from the UK are enjoying a sweet spot (Source: Getty)

British manufacturers are enjoying a boom in foreign business as export orders rose to a six-year high, a new survey shows.

Export orders to non-EU markets improved at a record pace in the three months to April, while total overseas orders rose to the highest level since April 2011, according to the Confederation of British Industry (CBI).

Optimism about foreign orders increased at the fastest rate in more than 43 years, since July 1973.

Read more: Why a weak sterling can help small businesses export internationally

Domestic orders also improved at the fastest pace since July 2014 in the quarter, with a balance of 23 per cent of firms seeing an increase.

The survey of almost 400 firms, which was carried out before Theresa May announced she would seek a General Election, shows output growth at a three-year high, with businesses expecting further acceleration in the next quarter.

Domestic orders have been supported by relative strength in the UK economy, while exporters have been boosted by the weakness of sterling and a stronger footing for the global economy.

Exporters are currently in a "sweet spot", according to the Bank of England's deputy governor Ben Broadbent. Sterling remains around 15 per cent below its pre-referendum peak, despite recent gains. This makes British products relatively cheaper for foreign buyers.

Read more: Businesses needs more stability on export support, BCC warns

Meanwhile there has so far been no change in the trading relationship with Europe or the rest of the world.

However, there were some signs the boom will slow owing to concerns over the domestic economy. Inflation has risen sharply because of the decline in the value of the pound, which some economists predict will drag on consumer spending.

Plans for investment in buildings and machinery both fell, with firms expecting the returns on investment to dip.

Rain Newton-Smith, CBI chief economist, said: “UK manufacturers are enjoying strong growth in demand from customers in the UK and overseas, and continue to ramp up production.

“Exports have surged and firms are at their most optimistic about selling overseas in over four decades. Even so, the combination of the weak pound and recovering commodity prices means that cost pressures continue to build, and manufacturers report no sign of them abating over the near-term.”