QE ‘not the answer’ says Ashcroft, as confidence falls
BUSINESS confidence among professional firms in Manchester has slumped in the last quarter, amid the worsening global economic outlook.
A survey of members conducted by pro∙manchester – the professional services organisation – reveals a gloomy outlook for turnover growth, the general economic picture and export prospects.
Pro.manchester’s chief executive John Ashcroft says the results are not a surprise and believes economic policy is flawed.
Ashcroft, who is also an established economist, said another round of Quantitative Easing – which the Bank of England is said to be considering – would not help improve confidence or kickstart growth.
He told TheBusinessDesk.com: “It would be extremely bad. It won’t tackle inflation – and that’s the issue. The MPC members are stuck in a bunker. They can’t understand why, although interest rates are so low, businesses are not investing.
“There will not be investment until the uncertainty clears – so there’s a clear disconnect between reality and policy.
“QE forces up bond prices, pushes yields lower, punishes savers, places more pressure on sterling, increases import prices, leads to higher inflation, greater pressure on real incomes, a reduction in household spending and possibly lower growth.”
The pro.manchester survey shows that prospects for business in the UK recorded a net balance of just 15.4% compared to a previous 50.4% and export prospects slumped to 5.7% from 28.1%.
While 70% of those polled expected to grow their turnover earlier this year, this figure has declined to 50%.
In line with this reduction in confidence, fewer members (34%) are looking to hire more staff – earlier polls saw this at 48%.
Competition remained greatest area of concern, while concerns over inflation grew steeply – from 39% to 46%. Fears over possible interest rate rises declined sharply though, from 34% to just 14%.
Over the past three months, 49% of members recorded an increase in turnover in line with the earlier survey. 14% recorded a fall in turnover compared to just 9% last time.
Pressure on prices were largely unchanged as the previous quarter, major concerns were general overheads (61%), pay settlements (24%) and finance costs (22%) the major concerns.
