Strong pound hits exports to UK's largest trading partner

THE UK’s economic recovery suffered a setback after industrial output unexpectedly fell in January, heightening concerns over the impact of a strong pound on manufacturing exports.

The strong pound is hitting exportsGETTY

The strong pound is hitting exports to the eurozone, Britain's largest trading partner

The Office for National Statistics said overall production fell by 0.1 per cent from the previous month compared with forecasts of 0.2 per cent growth, although it is estimated to have increased by 1.3 per cent on the previous year.

Manufacturing output dropped by 0.5 per cent in January from December, mainly due to a tailing off in the manufacture of computer, electronic and optical products. 

The data contrasts with a recent purchasing managers survey reporting healthy new orders and hiring intentions in factories as cost pressures ease. 

Domestic demand has been the key growth driver, although economists also pointed to signs that activity is picking up in the eurozone, Britain’s biggest trading partner. 

The sharp rise in the pound means exporters are facing greater obstacles to maintaining trade with the eurozone

David Kern, British Chambers of Commerce

But the continuing rise of sterling, up 0.5 per cent yesterday to €1.415 – its highest for more than seven years – is fuelling fears that exports to the Continent could come under pressure. 

British Chambers of Commerce chief economist David Kern said: “The manufacturing sector is facing major challenges. 

"The sharp rise in the pound means exporters are facing greater obstacles to maintaining trade with the eurozone.” 

Berenberg’s Christian Schulz said: “The pound’s rise by 11 per cent against the euro since December could become a significant headwind to UK producers for market share in Europe.” 

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Domino lines up a deal with Brother

DOMINO Printing’s 30-year listing on the London Stock Exchange is set to end after it agreed to a £1billion takeover by Japanese firm Brother Industries. 

The cash offer by the electronics giant, a former sponsor of Manchester City FC, values FTSE 250 firm Domino’s shares at 915p, a 26.9 per cent premium to the closing price before the announcement. 

Shares in Domino, whose printers are used for stamping barcodes and best before dates on food and drinks, soared 220p to 941p amid rumours of rival bids. 

Domino chairman Peter Byrom said: “Maintaining its position in enlarged markets will require Domino to find the appropriate partner that will bring complementary skills and strengths.” 

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Kelly BrookJD Williams

Kelly Brook is a brand ambassador for N Brown

Shrinking profits at N Brown

PLUS-SIZE fashion retailer N Brown saw its market value shrink by 17 per cent yesterday after sounding its second profit warning in less than six months. 

The FTSE 250 firm behind Jacamo, JD Williams and Simply Be blamed a hangover from the unseasonably warm autumn weather, which hit demand for coats and scarves and led to discounting across the high street. 

N Brown, whose brand ambassadors include model Kelly Brook, said annual profit would be slightly below City expectations of £88million. Shares fell 69.p to 339p. 

But chief executive Angela Spindler was “very encouraged” by the sales performance in the three months to February, while recently launched TV campaigns for its power brands should drive further gains. 

She said: “While we are disappointed by the slower than anticipated progress from a profit perspective, this is because we are taking the right decisions now in order to build a better business for an online world.” 

The firm is to close its Gray & Osbourn catalogue business, costing £11-13million.

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No more tears for Boohoo

FASHION retailer Boohoo.com was back in vogue yesterday as annual sales jumped 27 per cent to £139.8million. 

The Manchester-based company, one of a string of retailers to float on the London stock market last year, had seen its shares plunge by about 40 per cent after a January profit warning. 

They rallied 1.p to 27p yesterday, still well below their 50p listing price last March. 

Boohoo said that the number of active customers had increased by 29 per cent on the previous year to 3 million, with handheld devices now accounting for nearly half of visits to its website.

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Cairn dogged by $1.6bn bill

SHARES in oil explorer Cairn Energy plunged 15 per cent or 28óp to 155p yesterday after it found itself embroiled in a dispute over a $1.6billion (£1.07bn) tax bill in India. 

Cairn, one of several western companies including Vodafone to have fallen foul of the Indian authorities over tax in recent years, said it strongly contests the basis of the draft assessment. 

It still owns a 10 per cent stake in a subsidiary company there worth about $700million, which it is prevented from selling. 

Broker FirstEnergy said this could “cripple Cairn’s exploration programme in Senegal beyond 2015 and the developments in the North Sea”. 

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