Rising retail sales and exports aid recovery: Chancellor predicts steady period of economic growth and tries to quash fears of another 'boom-bust' cycle

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The Independent Online
MINISTERS yesterday played down fears that economic recovery would be short-lived as official figures fuelled the optimistic mood by showing surges in exports and high street spending.

The Chancellor, on the stump for the Newbury by-election, said Britain could look forward to a period of steady and sustained economic growth, although he stopped short of saying the recession was over.

'Recovery is here in manufacturing, recovery is here in retail sales, recovery is here in exports, recovery is here in confidence as well. The prospects are excellent. Britain is on the up.' He added that there was a very good chance of avoiding another 'boom-bust' cycle.

Mr Lamont's comments came as the Central Statistical Office released figures showing high street spending volume was rising at its fastest trend rate since the summer of 1988. Retail sales volume rose by an unexpectedly large 0.5 per cent in March to a record high. Sales volume in the three months to March was 1.6 per cent up on the previous three months.

The British Retail Consortium, the shops and stores trade association, said there were signs that sales of furniture and similar household items were picking up as house sales revived. John Wriglesworth, housing analyst at the stockbrokers UBS, said he had become more optimistic about house prices for next year, predicting a 7 per cent rise during the year while inflation stays around 5 per cent.

Separate figures showed that the building societies committed themselves to lend pounds 3.1bn in mortgages in March - double January's figure, but down on March last year.

Mark Boleat, director general of the Building Societies Association, said reports of a revival from builders and estate agents - together with other signs of recovery - suggested lending would rise through the year.

A further boost to recovery hopes came with figures showing a 6 per cent surge in exports to countries outside the EC in March. That helped to narrow Britain's non-EC trade gap to a five-month low of pounds 918m. Economists warned that figures for trade with EC countries - to be released later - would be less flattering, as EC economies were weaker and their demand more subdued.

City observers expressed some concern that exporters appeared to be using the boost to competitiveness from the pound's devaluation more to raise prices and profits than capture new markets. The volume of finished manufactures rose 3 per cent in the past three months, compared with a 7 per cent rise in prices.