Friday, 18 October 2019
Continued uncertainty leads to drop in business activity
In contrast to a strong second quarter, UK activity dropped off appreciably in the third quarter, the latest findings from the Chamber suggest.
Advanced manufacturing – a traditional area of strength in the East Midlands – saw a reduction in advanced orders on the previous quarter, while bookings were notably down.
Similarly, overseas markets struggled, with respondents to the the latest Quarterly Economic Survey suggesting a greater deal of volatility in activity levels on the previous quarter.
Perhaps most alarming was the State of the Economy Index which, after rallying in Q2 following a poor Q1 - attributed to Brexit uncertainty ahead of the original 29 March 2019 deadline for leaving the EU -, dropped to a low not seen since Q2 2013.
However there appears to be a contrast in the findings, with turnover and profitability expectations remaining relatively resilient – both dipping, but not to the same levels seen at the start of the year – suggesting a robustness in business’ outlook despite sustained, ongoing political and economic uncertainty.
Chris Hobson, Director of Policy at the Chamber, said: “The most notable result from the third quarter’s QES findings is the poor performance within the domestic market, with a quarter of businesses seeing a decrease in UK sales activity, traditionally a strong area for East Midlands businesses. Given these results, it’s perhaps surprising that sentiment remained relatively bullish.
“It’s impossible to say with certainty what’s behind this contrast, however, in conversation, there is a definite feel that with a 31 October deadline for the UK to leave the EU, many businesses believe an end to the drama of the past few years is near.”
However the Q3 results suggest that, while Brexit Preparedness rightly remains a key concern for businesses, a return of focus to key domestic challenges is required by policy makers.
Chris continued: “It is easy to forget that there are other significant factors impacting the economy in the East Midlands: automation and its impact on our manufacturers; changing consumer trends; the continued growth of the low carbon agenda and what that means for all businesses in terms of their products and processes and a global slowdown in activity, and what that means for all of us.
“One of the great shames of the past few years is that the above factors – and more – have not received due attention from policy and decision makers. The Government’s Industrial Strategy has stalled and the lion’s share of funding is being directed towards short-term goals as opposed to supporting businesses and the economy to respond to the challenges and opportunities that these changes will bring and this is perhaps reflected in these latest figures.”Back