Relentless Brexit uncertainty causes stalling economy amid manufacturing slowdown and skills shortages
The latest results from the British Chambers of Commerce’s Quarterly Economic Survey points to the impact that relentless Brexit uncertainty, rising business costs and tougher global trading conditions are having on the economy. The survey is the largest private sector survey of business sentiment and a leading indicator of UK GDP growth, closely watched by policymakers including the Bank of England. This picture is reflected in the Liverpool City Region as it is across the country, with underlying conditions such as skills shortages affecting businesses in addition to the wider economic factors.
In the manufacturing sector, the balance of firms reporting growth in domestic sales fell for the third successive quarter and is now at its weakest for three years, since Q2 2016. The balance of firms reporting an increase in export sales also dipped to a three-year low.
The services sector saw a slight increase in the balance of companies reporting higher domestic sales and orders, as well as export sales and orders. However, the uptick in activity was not enough to outweigh the significant drop in these indicators in the first quarter ahead of the original Brexit deadline in March and so all remain very weak by historical standards.
Suren Thiru, Head of Economics at the British Chambers of Commerce, explained:
“These results indicate that underlying economic conditions in the UK remain decidedly downbeat, with intensifying uncertainty over Brexit, the rising costs of doing business in the UK and a sluggish global economy combining to suppress key drivers of growth.”
Alongside the QES Q2 report, the Chamber of Commerce’s Workforce Survey shows that businesses in the North West are suffering from a skills gap in the local economy. A massive 60% of businesses reported that it takes them longer to fill vacancies than it did five years ago, which is allied with 46% reporting increased staff training costs and 50% of businesses spending more on recruitment.
Paul Cherpeau, chief executive of Liverpool Chamber of Commerce, said:
“The Q2 set of results clearly show the pressure being felt by our member businesses. Not only is Brexit uncertainty affecting confidence, both at home and abroad, but our region is also struggling to find the workforce resource that will boost productivity and profit in the long-term. It is vital that the Government puts in place robust plans that will unlock our trading future and the talent pipeline for businesses.”
Reacting to the Q2 results, Dr Adam Marshall, Director General of the British Chambers of Commerce, said:
“To boost and incentivise investment, our business communities are looking for a bold growth agenda here at home. The new Government must hit the ground running and introduce measures to reduce the upfront cost of doing business, deliver major infrastructure projects, and unblock the arteries of Britain’s skills and immigration systems.”