March 19 - Britain's Finance Minister George Osborne will announce his fourth budget on Wednesday knowing a European economic revival is key to his country's fortunes. Hayley Platt reports from a UK factory which has had to find new markets to thrive.
Fracino's been making espresso coffee machines since the 1990s. But despite its name and the product, it's not Italian. It's based in England. Adrian Maxwell is MD. SOUNDBITE: Adrian Maxwell, MD Fracino, saying (English): "My father went on holiday with my mum to Italy, went to a little shop and saw a guy repairing machines, he asked the gentleman if he could buy it. The guy thought he was crazy. My father gave him 5,000 lire for it was about £3 then. Brought it back to England, got the machine working and that really was the start." 50 years on Fracino exports to 50 countries, including Russia, Peru and even Italy. Since the start of the financial crisis exports have been crucial. They now account for 25% of the business - up from just 2% before 2008. But the euro zone has been a struggle. SOUNDBITE: Adrian Maxwell, MD Fracino, saying (English): "We've tried in Spain, we're still struggling to do anything there really. France a little bit. Germany is very slow as well. Poland again very slow. Northern Europe, Finland, Norway and Sweden aren't so bad and they are starting to open up for us." Operating from the UK has been good for Fracino but for how much longer? A triple dip recession is looming and there's not much spare cash to give away in this week's key budget. The UK still relies too heavily on Europe - almost half of exports are to the continent. Commerzbank's Peter Dixon. SOUNDBITE: Peter Dixon, Commerzbank, saying (English): "What we actually need is stronger demand in the rest of the euro zone. It's as simple as that. So yes we make the taxation system a little bit more advantageous, we can certainly cut corporation tax if we really want to. The exchange rate can be weakened if necessary but ultimately it's not going to help until such times as we get a more stable demand situation elsewhere in the rest of the world." The Finance Minister is expected to admit he won't meet his debt target further damaging the government's reputation for economic competence. Growth is proving illusive and after three years of austerity George Osborne can't rely on consumer spending. SOUNDBITE: Michael, test technician, Fracino, saying (English): "It's very difficult for me because I'm paying off debts. New car no, maybe new sofa yes, but I would save up first, I wouldn't take out a loan and I would have as little as possible to do with the bank." The UK does of course have the advantage of controlling its own currency. And the current weakness of sterling is helping exports. Fracino is now looking to North America and Korea. But there are too few firms brewing up business outside Europe. And without a u-turn on austerity many say Osborne could struggle to whip up growth at home.