London lagging despite revival

FRESH evidence that London's economy bounced back in the second quarter of the year emerged today, although the capital is still trailing the rest of the country.

Driven by an encouraging improvement in the fortunes of the manufacturing sector, both domestic and export sales have picked up over the past three months. London's massive service sector is starting to recruit again and confidence has rebounded.

But in a sign that manufacturers are being forced to slash prices to remain competitive, their cashflow had deteriorated sharply and is well below the national average.

The latest British Chambers of Commerce quarterly economic survey found that a net 3% of London's manufacturers enjoyed increased domestic sales in the second quarter compared with the net 12% who said sales were falling in the first quarter. A net 40% of manufacturers and a net 25% of service sector firms are confident of improving turnover over the next 12 months.

In markets, Opec warned that demand for oil will be higher than expected for the rest of the year. Its economists said that demand will rise by just over a million barrels per day to an average of 77.79 million barrels during the year, boosted by economic recovery and higher demand from China, Japan and the US. The warning pushed the US oil price up 13 cents to $32.09 a barrel. Sterling was under pressure, down almost a cent at $1.5810.