Exports boost for confidence

BUSINESS confidence bounced back in the final three months of last year thanks to a dramatic improvement in Britain's export market as the global economy continued to recover.

But the good news was tempered by a slowdown in the domestic market, prompting industry calls for the Bank of England to cut interest rates if conditions at home deteriorate further.

A poll of more than 5000 firms by the British Chambers of Commerce found manufacturers shipped more goods overseas in the fourth quarter than at any time in the past eight years.

The service sector also enjoyed rising export orders and sales. While the eurozone, Britain's biggest export market, is still struggling, the US economy is picking up.

In contrast, business at home, both for manufacturers and the service sector, slowed sharply to its weakest since the third quarter of 2003. Nevertheless, manufacturing's confidence about turnover leapt 12 points to 50%, while that of service sector firms shot up 14 points to 55%.

BCC director general David Frost said: 'The reduced threat of sharp interest rate increases has contributed to improved confidence. But the pressure on costs and margins, the relentless increase in regulations and the threat of higher taxes remain serious problems.

'If manufacturing prospects worsen, or if house prices start falling more sharply, early interest rate cuts should be actively considered.'