July 06, 2012
BCC survey predicts slow recovery for the UK economy
Economic growth in the UK is still too sluggish for a sustainable recovery according to the latest Quarterly Economic Survey (Q2 2012) conducted by the British Chambers of Commerce (BCC).
However, commenting on the figures, David Kern, BCC chief economist, said: “While disappointing, they raise questions over the accuracy of the ONS assessment that we are in technical recession.”
The survey polled 7,805 businesses and it shows that while many of the balances are in positive territory, they are still below levels seen before the recession in 2007. The survey does, however, highlight an improvement in exporting activity.
The survey results showed the following:
- Domestic orders: The balance of manufacturing firms reporting an increase in forward-looking domestic orders rose two points to +8%, but in services fell two points to +5%.
- Exporting: Balances measuring exporting activity for the past three months (export deliveries) among manufacturers rose seven points to +31%, and among service sector firms rose eight points to +24%.
- Employment: The balance of manufacturing firms hiring staff remained the same as last quarter at 16%, but the balance of service sector firms that had taken on staff rose six points to 10%.
- Confidence: In manufacturing, the balances measuring confidence in turnover and profitability rose, but in services, both balances remain unchanged on the last quarter.
- Growth plans: Intentions to invest in training increased marginally (by one point) among manufacturers, but remained unchanged for service sector firms. Plans by manufacturers to invest in plant and machinery fell by six points to +11%, but by service sector firms remained unchanged on the last quarter at 5%.
- Finance: 37% of all firms said that inflation is still a big worry. Compared to Q1, the number of manufacturers concerned with exchange rates rose sharply from 38% to 52%, reflecting concerns around the impact of the eurozone crisis.
John Longworth, director general of the BCC, said: “While domestic growth continues to bump along the bottom, the silver lining is an increase in firms looking for export opportunities, and in many cases, with countries outside Europe.”
David Kern added: "UK businesses and consumers must realistically plan for a period of relatively low growth in the next few years, as fiscal austerity restores stability to our public finances and the eurozone’s problems create a challenging environment for our exports. But prospects will improve later in the year and in 2013, as falling inflation improves consumers’ disposable incomes, and our exporters persevere with efforts to diversify their sales into faster growing markets outside Europe."