Manufacturers lead post-Brexit bounce-back in Greater Birmingham

BUSINESSES in Greater Birmingham have been praised for showing resilience in the wake of Brexit with a new report suggesting there is an optimistic outlook amongst firms in the region.

The Greater Birmingham Chambers of Commerce’s Q3 economic survey concludes firms are looking to move on after drawing in a line in the sand following June’s EU referendum.

The new report, prepared in partnership with the University of Birmingham, suggests overall business confidence remained buoyant during the third quarter, with 61% of companies expecting to improve their turnover in the next year.

Paul Faulkner, chief executive of Greater Birmingham Chambers of Commerce, said: “It’s encouraging that the region is feeling optimistic post-Brexit.

“While there was a drop in the proportion of firms reporting an increase in domestic sales – perhaps reflecting the immediate uncertainty following the vote – advance orders are back on trend and confidence remains strong.

“This is a testament to the resilience of Greater Birmingham businesses. However, given some lingering concerns about Brexit, it is not surprising to see that the proportion of firms looking to increase their investment and training budgets dipped this quarter.”

He said firms were now hoping to see greater clarity on the Government’s industrial strategy, investment in infrastructure and investment plans in the region during the Autumn Statement.

“We know that trading internationally has rarely been more important for the business community. That is why we have just launched the GBCC International Hub, offering comprehensive international trade support,” added Mr Faulkner.

However, the report indicated that while more than half of firms in Birmingham (55%) are attempting to recruit new staff, 60% are still struggling to find the right people.

The report also showed domestic sales for both services and manufacturing firms fell in the immediate aftermath of the referendum.

But manufacturers in particular have bounced back, with 44% recording increased orders, up from 33% in last quarter and the export market continued the same trend.

Almost a third (31%) of manufacturers said overseas sales had increased, compared with 29% in Q2 and orders also improved to 38% compared with 32%.

The fall in the value of sterling appears to have been the major factor benefitting exporting manufacturers, although a significant number of companies across all sectors cited exchange rates as a concern.

Of more concern is that plans to invest in new equipment remained low across all sectors, with those expecting to increase their buying dipping to 16% compared with 24% in Q2. Training was also hit, with a quarter (25%) of firms saying they planned to increase their investment – a 5% drop on the previous quarter.

Professor Julian Beer, deputy vice-chancellor at Birmingham City University, said: “Export growth, particularly in the manufacturing sector, appears to be benefiting from sterling’s depreciation. However, exchange rate volatility is a key concern for the future.  

“Overall business sentiment is positive, despite the continued lack of any definition of Brexit, the process of how it will be achieved and when it will be triggered.”