UK’s economic outlook worsening, say region’s firms, despite most expecting higher sales this year

April 4, 2024

Confidence in the UK’s economic prospects among West of England bosses has continued to fall despite most expecting their own business to prosper this year.

The latest Quarterly Economic Survey (QES) from Business West, the organisation behind Bristol Chamber of Commerce, shows just 16% of firms in the region think the economy will improve over the next few months – a fall of three percentage points on the previous survey. 

By contrast, 63% are optimistic about their own fortunes, with nearly the same percentage anticipating a higher turnover and 44% expecting their profits to rise.

The QES, which last quarter attracted 268 responses, also shows despite the gloom about the UK’s outlook, many firms are seeking to increase their staffing levels.

Some 42% are actively seeking new hires, and while 63% say they face hurdles to attracting new employees, this is down on the previous quarter when 71% reported problems.

Other key findings show that inflation pressures are persisting despite the headline rate falling sharply over recent months.

The survey reveals that 35% of firms have increased their prices over the quarter, with higher labour costs (64%), utilities (46%), raw materials (35%) and fuel (26%) named as factors.

Some 38% expect to further raise their prices further during the next quarter.

While there was a significant uplift in the domestic market – with the net balance of firms enjoying higher sales rising from 7% to 18% – export challenges remain.
Overseas sales dipped to a balance of minus 4% net – a downturn from plus 1% in the previous survey.

Other factors included concerns over cashflow – with liquidity challenges triggering a fall in the net balance to minus 1%.

However, the investment picture was more encouraging with all categories showing growth. 

Investment plans for plant, machinery, and equipment had a net balance of 3%, matching the net balance for office and property space investments. More significantly, investment plans in training and research and development were up by 8% and 6% respectively.

Business West director of policy Matt Griffith, pictured, said: “We’ve seen a trend develop over the past year where West of England businesses are more confident in their own prospects than the wider economy’s.

“It is encouraging to see so many companies are wanting to recruit. However, filling roles still remains a challenge. This is clearly an issue that needs to be tackled by whichever government that comes in.

“We are concerned to see a decline in export sales, with global trade remaining tough.”

He said on the whole businesses were having to work harder to meet their goals, especially with the uncertainty in the national economy and the overall lack of confidence among consumers and investors.

“However, optimism is growing and businesses appear to be feeling more upbeat as we move into spring,” he added.

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