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Focus on strengths not triple dip, say BCC

Growth will be positive but subdued this year, suggest the British Chambers of Commerce (BCC), as key balances in the manufacturing and services industries occurred in Q1.

The BCC’s Quarterly Economic Survey showed export balances in the service industry were particularly strong, as deliveries and exports neared highs seen in 1994.

Profitability confidence rose in manufacturing to +33%, the highest it has been since Q4 2007.

Intentions to raise prices were markedly lower, particularly in manufacturing where balances dropped 19 points, reflecting reduced pressures from raw materials costs.

The BCC’s chief economist, David Kern, suggested ONS GDP figures had exaggerated the weakness of the UK economy, and urged commentators to aid confidence by avoiding talk of triple dip recession.

John Longworth, director general of the BCC, said: “Although the progress seen in the first quarter of this year is modest, it is progress nonetheless. Business confidence has increased further, and it is really encouraging to see export orders and deliveries near to their record high levels in services.

“This showcases the determination and ambition of our businesses here in the UK, despite continued pressures both at home and abroad. But the fact remains that the economy is still not strong enough. The fall in most employment balances is disappointing, and reminds us that a strong labour market cannot be taken for granted.

“The Government should be quick to implement the supply-side measures announced in the Budget to get growth moving, and consider new ways to support business confidence, which has continued to rise.”

He added: “It is clear from our survey that any growth this year will be slow and steady, and it is important that this does not veer off course. Recent welcome steps to improve business access to finance, including the commitment to create a business bank, must be followed through without bureaucratic delays.

“But the scale and scope of the new bank must go well beyond the government’s current plans. Although business supports the government’s plans to shift current spending towards capital investment over the next Parliament, it could go further still to boost growth in the short-term, such as through road maintenance and house building.”

This was posted in Bdaily's Members' News section by Tom Keighley .