Brexit biting as business confidence drops – Chamber survey says
The World Cup, Black Friday and a buoyant construction sector helped mitigate the effects of inflation, Brexit and declining confidence, according to the latest Quarterly Economic Survey by Greater Manchester Chamber of Commerce (GMCC).
The survey of 324 businesses held between November 7, and November 30, revealed that sales to UK customers increased in the services and construction sectors, while it declined dramatically in the manufacturing sector.
Sales in the manufacturing sector remain well below the same period last year, a fact confirmed by other surveys. Within the services sector, B2B businesses report stability while B2C businesses have seen a quarterly increase in sales. The international trade picture is in sharp contrast to the domestic with export sales show a further decline in this quarter.
Subrahmaniam Krishnan-Harihara, Head of Research at Greater Manchester Chamber of Commerce, said: “Despite the untouchability of Brexit politically it has undoubtedly had an impact on the strength of our currency, and added a layer of complexity to international trade.
“Although inflation, higher food prices and mortgage payments have squeezed household budgets, anecdotal evidence supports the main findings of the QES.
“Spending during Black Friday sales contributed to an uptick in service sector activity. So has increased hospitality spend in the lead up to the festive season.
“It is also likely that the FIFA World Cup, particularly the progression of the England football team, led to increased patronage at pubs and bars giving a boost to the hospitality sector. However, the post-Christmas period presents some concerns. There are valid questions around the ability of households to sustain consumer spending beyond the festive season, which could affect economic growth and business sentiment.”
The survey results also showed further weakening in other important indicators such as cash positions, investment intentions and business confidence.
Business in all three sector groups report diminishing cash positions, which has hampered their ability to invest in new equipment and machinery. Businesses face higher operational costs, but the latest survey results show that businesses are either unwilling or unable to increase their selling prices, which means they are having to absorb more costs and face lower margins.
Subrahmaniam added: “The loss of confidence and weakening in other QES measures does not bode well for business investment in the medium-term.
“The Chamber of Commerce network’s economic forecast indicates that business investment will continue to lag. Recent changes to R&D tax credit scheme for SMEs is not going to help.
“The Autumn Statement has provided some stability and calmed the markets. The next intervention from government must be to come up with measures to trigger business investment and secure sustainable economic growth.”
