There may be trouble ahead But while there's moonlight and music And love and romance...
Soaring VAT fraud is significantly inflating the UK's export growth figures. The Ernst & Young ITEM Club Summer forecast, released yesterday, predicts that export growth for 2006 will be more than 15 per cent.
"However, once you allow for Missing Trader VAT fraud (MTIC) the headline figures look much more modest and stand closer to nine per cent," the accountancy firm says.
Although the real growth figure is much better than the last two years, Professor Peter Spencer, chief economic advisor to the ITEM Club, notes: "It appears that the recent revival in UK exports largely reflects the activities of fraudsters rather than genuine business. When seen against the background of the boom in world markets, it's actually very disappointing."
London 24 July 2006: The Ernst & Young ITEM Club Summer forecast, released today, reveals that UK manufacturers’ poor performance is preventing the economy from rebalancing, piling pressure on the already overextended consumer and government sectors.
It shows that over the last decade there has been a considerable improvement in UK manufacturing productivity growth - beyond that of our largest European competitors. However, simultaneously there has been an even larger increase in domestic labour costs, leading to the UK persistently losing export market share in Europe and elsewhere.
It's all going pear shaped for Gordo...