The German engineering sector is staging an export-led recovery which could help pull UK manufacturing out of recession, experts said this week.
Output of machinery in Germany has grown for two consecutive months, the strongest sign yet of an improvement in Europe’s largest economy.
Brian O’Keefe, head of engineering research at Commerzbank, said: `Unless something goes seriously wrong, August’s figures are likely to show a year-on-year increase. This is good news because it shows there has been a recovery in German export markets – the same markets UK engineers are selling to. And the UK supplies quite a lot of components to Germany.’
Exporters hit by the high value of the pound will benefit if the German economy recovers, according to the German-British Chamber of Commerce. Director general Ulrich Hoppe said: `The German recovery is being led by exporters, who have benefited from the weak euro. As recovery takes hold, the euro will strengthen and things will become easier for UK companies exporting to the euro zone.’
`I can see the sterling exchange rate reaching about DM2.40 at some point in the next four to five years,’ he added.
Sales of textile machinery and simple components such as bearings have started to bottom-out in Germany after more than a year of decline. `These are the sectors which are most likely to lead a cyclical recovery,’ O’Keefe said.