Exports 'at their strongest for eight years'

UK exporters shrugged off the strength of sterling to report their best performance in eight years, according to a survey published today.

UK exporters shrugged off the strength of sterling to report their best performance in eight years, according to a survey published today.

The latest edition of the Business in Britain report from the banking group Lloyds TSB shows that 45 per cent of companies saw their export sales rise in the first half of 2004, a 7 per cent improvement on the same period a year ago.

Lloyds TSB, which canvassed more than 2,100 companies with an annual turnover of at least £1m, attributed the improving trend to stronger global economic growth. The Eurozone's GDP rose by 0.5 per cent in the second quarter, official figures yesterday showed.

Peter Sargent, the bank's director of international trade finance, said major growth in exports to India and China was fuelling the progress.

He added: "China is buying metal like it's going out of fashion. It's also buying components for some of its more sophisticated industries."

Exports to the Eurozone were more subdued, with 36 per cent of companies reporting a growth in sales to the Continent during the period, 6 per cent up on 12 months ago. The retail sector fared best, with almost half of businesses seeing exports to the Eurozone grow, the survey found.

The report found that despite rising exports to mainland Europe, the proportion of companies trading in the single currency slipped 3 per cent in the last 12 months.

Mr Sargent said UK businesses had hedged against the strength of sterling, adding: "These figures serve as a reminder that British businesses still have plenty of muscle when it comes to competing in Continental markets."

Despite the Bank of England's hint that interest rates had almost peaked, Mr Sargent issued a warning: "Despite firms' undoubted resilience, further rises would push sterling higher and squeeze exporters' profit margins tight."

The report found that 38 per cent of companies believe European export sales will continue to grow during the rest of the year, with just 10 per cent forecasting a fall.