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Chamber Economic Survey shows further uncertainty

 

Businesses are in a period of stasis waiting for certainty on issues such as Brexit according to the latest North East England Chamber of Commerce Quarterly Economic Survey.

The QES results, the largest independent survey of NE businesses, showed main barriers to business success wereconsidered to be: uncertainties of future economic and market conditions and clients holding back on decision-making processes until there is clarity. Difficulties finding and affording suitably qualified staff were also commonly reported.

Chamber President Lesley Moody said: “We see overall business conditions largely unchanged in the last three months. Many firms are stuck in a holding pattern; awaiting certainty before they proceed with investment, recruitment or expansion plans. For others, this is a time of nervousness and perfectly valid concerns about the potential impact of a hard Brexit.

Reading further into the results, we see a discrepancy between the fortunes of service and manufacturing businesses; with the latter suffering a marked decline in domestic markets which is not being offset by a small improvement in exports.

The consequences of this are a serious fall in cashflow and stagnation in recruitment. As a region with such a strong manufacturing base, we should be worried about these results and Government should see them as a warning sign.

Overall, key indicators for sales and orders both domestically and internationally have bounced back slightly from the decline seen in the previous quarter, however scores remain broadly at or below where they were this time last year.

Plans for growth in investment are largely unchanged and somewhat behind the Q2 2018 results. Scores for training and plant investment are down 4.5 and 5.6 percentage points respectively from this time last year.

Uncertainty is also clearly weighing on businesses’ day to day operations, with cashflow growth falling to 0.9%; down on both the previous quarter and last year’s results. Determining the exact cause of this is difficult, but pre-Brexit stockpiling is clearly a factor. The effects of this are felt far more strongly by manufacturers, with cashflow scores falling to -8.7%.