Fall in business confidence over profits

08 Jan 2018

Business

The findings for the final St Helens Economic Survey of 2017 showed that the economic situation has worsened in the last quarter, with just 45% of respondents expecting profits to increase in the next 12 months, falling from 80% earlier in the year.

This reflects the political uncertainty, currency fluctuations and the vagaries of the Brexit process in the UK, which are continuing to weigh on business growth prospects.

On a more positive note, there was a breakthrough in Brexit negotiations in Brussels on the 8th December 2017. Businesses will be breathing a sigh of relief that ‘sufficient progress’ has been achieved; but with the caveat that they want to see a swift start to trade talks.

Key findings include:

  • Both sectors reported falls in sales and orders from its UK customers, but this was more acute for the service sector.
  • Despite price pressures on manufacturing firms, there was a boost in export volumes – possibly stimulated by stronger global demand.
  • Staffing over the last quarter of 2017 has dropped downwards for both sectors. Employment intentions pointed to modest growth in staffing over the next three months.
  • 53% of all respondents experienced recruitment difficulties; whilst technical skills remains the major skills shortage for manufacturing, both sectors had problems sourcing unskilled & semi-skilled staff.
  • The number of service sector firms operating at full capacity has increased to 46% – the highest level since 2013. Conversely, only 15% manufacturing firms are operating at full capacity.
  • Price pressures have increased for manufacturing, mainly for raw materials, although other overheads have eased in Q4 17.

Tracy Mawson, Deputy Chief Executive at St Helens Chamber, commented: “Businesses will welcome the breakthrough on negotiations in Brussels in December. A swift start to trade talks is crucial to upcoming investment and growth decisions as companies want absolute clarity on the long-term deal being sought, and want government to work closely with business experts to ensure that the details are right.

“Yet even the best possible Brexit deal won’t be worth the paper it’s written on if the government fails to address the many long-standing and well-known barriers to growth here at home. Ever-rising upfront costs, a labour market at capacity, growing pressure on land use, and a physical and digital infrastructure in need of investment and expansion, all prevent UK firms from reaching their potential. While the recent Budget made some welcome steps in the right direction, concerted and sustained action to fix the fundamentals is needed to encourage business investment and growth.

“Members can be assured that St Helens Chamber will be working very closely with the British Chambers of Commerce to articulate your concerns at the highest level of Government.”