Soaring VAT fraud is significantly inflating the UK's export growth figures. The Ernst & Young ITEM Club Summer forecast, released yesterday, predicts that export growth for 2006 will be more than 15 per cent.
"However, once you allow for Missing Trader VAT fraud (MTIC) the headline figures look much more modest and stand closer to nine per cent," the accountancy firm says.
Although the real growth figure is much better than the last two years, Professor Peter Spencer, chief economic advisor to the ITEM Club, notes: "It appears that the recent revival in UK exports largely reflects the activities of fraudsters rather than genuine business. When seen against the background of the boom in world markets, it's actually very disappointing."
The main theme of the ITEM Club forecast concerns poor performance by UK manufacturers. The summary is here. ®