Fiscal tightening will work, say UK importers and exporters

Over three quarters of the UK’s SME importers and exporters believe that fiscal

* 76% of importers and exporters believe Chancellor’s austerity programme will work
* Importers and exporters adopt a ‘wait and see’ approach in October

Over three quarters of the UK’s SME importers and exporters believe that fiscal tightening will successfully reduce the UK’s budget deficit, according to the latest Travelex Confidence Index (TCI) report. 76% believe that the Coalition’s aggressive programme of spending cuts and tax hikes will work. Travelex said that their ringing endorsement of the Chancellor’s plans echoes that of rating agency Standard & Poor’s, who recently upgraded the UK’s economic outlook.

“Most of our business customers seem to be accepting that Government spending cuts are a ‘necessary evil.’ Whilst they might hurt business in the short-term, they are confident that the fiscal squeeze will reduce the deficit over the long-term, which is encouraging,” said David Sear, Global Managing Director at Travelex Global Business Payments.

Most importers and exporters adopted a “wait and see” approach in October, as the overall Confidence Index remained stable at 104. The index is now 7 points lower than it was in August. Faith in the current economic situation worsened; with confidence in the current economic environment falling 6% to 50%. Despite this, confidence in future international trading conditions edged up 2% to 62%.

“Overall, the latest index shows that UK importers and exporters seem to feel better about their longer term prospects than they do about their current situation. However, a recent string of positive UK data, such as stronger than expected third quarter growth and upbeat manufacturing activity, suggests sentiment among local importers and exporters may head higher over the near term,” commented David Sear.

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About Travelex Confidence Index

The Travelex Confidence Index (TCI), released monthly by Travelex Global Business Payments, provides commentators with a key indicator on international trade and economic conditions. Conducted by independent research company TNS-RI, the Travelex Confidence Index tracks the views and sentiments of the UK’s SME importers and exporters across industry sectors and UK regions. The TCI is the only piece of research available that regularly tracks the UK’s SME importers and exporters. Visit www.travelexbusiness.com/uk/confidence-index