UK Economy Shows Growth Led By Higher Exports: Business Leaders Cheer Cameron’s Economic Policy

A fourth quarter surge in the U.K. economy has brought cheer for ruling Conservatives. It exceeded all predicted estimates and showed rising incomes and strengthening of exports having successfully steered Britain into its longest stretch of uninterrupted growth since 2008.

The encouraging indicators were rise in household spending by 0.6 percent in the three months of October, November and December 2014 and exports showing a jump of 4.6 percent, highest since 2013, according to the Office for National Statistics in London. Bloomberg reports that the Gross domestic product expanded 0.6 percent as an eighth consecutive quarterly gain. The Bank of England also said it will keep the key interest rate at a record low and watch the implications of the unprecedented slide in the inflation rate that plunged to zero.

Political Gain

The news of sustained economic recovery is a boost for Prime Minister David Cameron, who is facing a national election on May 7. Finance minister George Osborne also reacted positively to the data that showed household incomes rising at the fastest annual pace in more than four years. In 2014, overall the GDP grew 2.8 percent, up from a previous estimate of 2.6 percent as the strongest growth since 2006. Scotiabank economist Alan Clarke said the big picture for Britain, which grew faster than any other developed economy in 2014, was quite positive. Latest news also suggests the economy is showing a decent growth in the first quarter of 2015.

Business Lobby's Open Letter

Meanwhile, Sky News reports that many business leaders are openly supporting Tory economic policies as they apprehend job cuts and decline in investment from a Labour regime that may put brake on Britain's economic recovery. In an open letter signed by more than 100 leading business figures, the business figures wrote: "We believe this Conservative-led Government has been good for business and has pursued policies which have supported investment and job creation.

"David Cameron and George Osborne's flagship policy of progressively lowering Corporation Tax to 20 percent has been very important in showing the UK is open for business. It has been a key part of their economic plan. The result is that Britain grew faster than any other major economy last year and businesses like ours have created over 1.85 million new jobs. We believe a change in course will threaten jobs and deter investment. This would send a negative message about Britain and put the recovery at risk."

In a reaction to the letter, Labour's shadow business secretary Chuka Umunna said no one will be surprised that some business people are calling for low taxes for big businesses. But Labour does not believe, as David Cameron does, in more tax cuts for the richest in society. For Labour, the priority is tax cuts for small firms, working people and saving the NHS. Labour has already pledged to reverse the Government's cut in corporation tax in order to finance for a reduction in rates for 1.5 million small businesses.

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