The export market in the UK looks set to be an important contributor to the economy this year, a new report has stated.
According to the Ernst & Young ITEM Club, there was a 5.1 per cent surge in export volumes from the UK during 2011. The organisation is confident that this will go up to 4.5 per cent in 2012, thereby increasing Britain's gross domestic product (GDP) by 0.3 per cent.
The ITEM Club acknowledged that this may not sound like a great deal, but stressed it would in fact help stop the economy slipping into negative territory at a time when domestic demand is "in the doldrums".
Peter Spencer, chief economic advisor to the body, added that as conditions on the international markets continue to get better, the export sector's contribution to GDP will gradually increase.
However, he acknowledged that continued tensions in the Middle East might still prove to be a threat over the coming months, as they could lead to oil prices being pushed upwards. Furthermore, he noted the debt crisis in the eurozone may also be a problem, as it already hit the number of shipments to mainland Europe last year.
"If these crises escalate, UK exports and GDP would be a major casualty," Mr Spencer commented.
Estimates from the ITEM Club suggest the UK economy will grow by 0.4 per cent in 2012 and 1.5 per cent next year, before rising again to 2.6 per cent in 2014.
Mr Spencer believes the willingness of British companies to invest could be critical to driving growth over the coming years, but said many appear to be reluctant to do so.
"Until these companies stop stashing the cash and start increasing levels of investment and dividends, the economy will remain on the critical list," he stated.
Nevertheless, a recent survey by Western Union Business Solutions suggests that confidence in worldwide trading conditions appears to be picking up in the UK, with nearly two-thirds of small to medium-sized enterprises feeling positive.