British car production reached its highest level since 2007 last year, buoyed by strong domestic demand and exports. REUTERS/Darren Staples
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A bumper year for Britain's car industry offers some hope the economy will start to grow in a more sustainable way, with a better balance between investment and spending. In 2013, Britain enjoyed its best year of economic growth since the financial crisis, outpacing other advanced nations. Every year since 2010, Britain's budget watchdog has predicted a rebound in annual business investment – but it is still a third lower than before the financial crisis of 2007-2009 .Britain's stronger economic outlook should encourage firms to invest their large cash reserves.The exception is the car industry – which benefited from an upturn in demand well before other sectors and saw more than 2.5 billion pounds ($4.16 billion) of new investment in 2013 .One big factor in Britain was probably compensation payments by banks to consumers for mis-sold insurance which were often big enough to be used as a deposit on a new car.The investment was only feasible thanks to strong domestic demand, said Ian Malcolm, ElringKlinger's U.K. managing director.Only a third of the parts in a British-built cars are made in Britain, compared with half elsewhere.
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