* The recession has affected different parts of the economy in
different ways. In the UK some sectors, such as government or
financial services, have been hard hit.
* Other parts of the economy have done comparatively
well.
* The UK labour market, for instance, has proved
unexpectedly resilient. Business services, a broad sector, which
includes computing, legal services, accounting, management
consultancy, engineering and advertising, has posted growth of
almost 10% over the last two years. And the UK's largest
companies have come through in pretty good shape.
* We have just looked at some of the key financial
metrics for the UK's top 350 quoted companies that make up
the FTSE350 index. What emerged was a picture of sustained
outperformance compared with the broader UK economy driven, in
large part, by growth in overseas markets.
* We estimate that FTSE350 companies derive about 55% of
their revenues from overseas. With growth outside the UK,
especially in emerging markets and the US, far stronger than at
home, overseas exposure has provided a vital support for the health
of the UK's largest companies.
* FTSE350 companies which derive more than 70% of their
revenues from outside the UK have, on average, performed more
strongly than their UK-focussed peers in the last five years.
* Over this time turnover for international companies has
averaged just over 12% a year, more than twice the rate for
companies making more than 70% of their revenues in the UK.
* Growth in hiring by international businesses has
averaged 6.4% a year for the last 5 years compared to 1.0% growth
in employment by UK-facing businesses. And wages have also
increased more quickly among international businesses, averaging
11.2% a year, almost four times as fast as in UK-facing
businesses.
* Margins have proved more stable among international
companies too. And international firms have raised dividend
payments by 70% since 2008, five times faster than UK-facing
firms.
* It is, perhaps, a sign of the tough conditions in the
UK that large businesses operating here have sharply reduced their
borrowing, or gearing, in the last five years. International
businesses have kept gearing fairly constant.
* Yet we should not underestimate the resilience of the
large businesses which focus on the UK as they faced the severest
economic downturn since the 1930s. These companies have managed to
grow revenues by a total of 20% in the last five years, they have
continued to hire through the financial crisis and the recession
and are, today, almost as profitable as their internationally
focussed peers.
* The strong international exposure of large quoted UK
corporates has been a source of strength in recent years. But big
businesses selling into the UK have come through the financial
crisis in pretty good shape too. A widely expected recovery in UK
growth, coupled with accelerating activity overseas, points to
better times ahead for the UK corporate sector.
MARKETS & NEWS
UK's FTSE 100 ended the week up 1.5%.
Here are some recent news stories that caught our eye as reflecting key economic themes:
KEY THEMES
* The Bank of England upgraded its forecast for UK GDP growth in
2013 to 1.0% from a previous 0.9% estimate, citing a "slow but
sustained" recovery
* US consumer sentiment rose in May to its highest level since
July 2007, according to the Thomson Reuters/University of
Michigan's survey
* The Japanese economy grew at a faster-than-expected rate of 0.9%
in Q1 2013, driven by strong private consumption and export
growth
* Ratings agency Fitch upgraded Greece's credit rating
by one notch, from CCC to B-, citing progress in cutting its budget
deficit and reduced risks of a eurozone break-up
* The Greek prime minister, Antonis Samaras, appealed to citizens
to "put on our best face to foreigners", with the country
expecting a record 17 million tourists this year
* The French economy contracted by 0.2% in Q1 2013, officially
entering recession
* French president François Hollande called for a united
"economic government" in the eurozone, with its own
full-time president, budget and harmonised tax system
* Spain recorded its first monthly trade surplus for more than 40
years, with the March surplus driven by a 15% annual fall in
imports
* The European Commission said it had carried out
"unannounced inspections" at a number of big oil and
biofuel companies, regarding possible collusion to fix oil
prices
* UK unemployment rose by 15,000 in Q1 2013, with the jobless rate
up from 7.7% to 7.8%
* The number of first-time buyers in the UK rose by almost 20% in
March from February according to data from the UK Council of
Mortgage Lenders
* PC maker Dell reported a 79% fall in net profit in the 3 months
to 3rd May, driven by decline in personal computers sales as more
consumers shift to smartphones and tablets.
* New car sales in Europe rose for the first time in 18 months in
April, helped by strong demand in the UK and by the early Easter
break
* India steelmaker Tata Steel announced a $1.6bn writedown on the
value of its European assets, citing the weakness of European
markets
* The Financial Times website and multiple Twitter accounts
belonging to the news organisation were hacked, apparently by a
hacker group called the Syrian Electronic Army
* British Gas owner Centrica said that gas use has risen by 18% in
the first 4 months of 2013 due to "exceptionally cold
weather"
* UK retailer Poundland said that it plans to cut its prices to 97
pence in some stores as a response to the increase in 99 pence
shops – small change
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