Economics Weekly by Lloyds TSB

Exports are powering economic growth in Germany, but can the same thing happen in the UK? After all, the UK is banking on a rebalancing of the economy away from consumer spending towards exports to drive the recovery. Can the UK emulate Germany’s export surge?

Exports are powering economic growth in Germany, but can the same thing happen in the UK? After all, the UK is banking on a rebalancing of the economy away from consumer spending towards exports to drive the recovery. We look at a number of comparable macroeconomic statistics to assess whether the UK is in a position to emulate Germany.

Figures for the second quarter of 2010 showed a rise of 2.2% in German GDP, the best performance amongst the EU economies by far and one of the fastest quarterly increases in the series since the 1950s. Even assuming that growth slows markedly in the second half of 2010, the figures suggest that the German economy will expand by around 3% this year. To say this is quicker than was expected a year ago is an understatement. For instance, the median forecast for German growth in 2010 as recently as January this year was 1.8%. By contrast, the projections for UK economic growth in 2010 have barely budged from around 1¼% since the start of the year.

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