- BCC’s Quarterly Economic Survey is the first major economic indicator of the year, and is closely watched by the Bank of England and the Treasury
- Positive Q4 survey suggests that growth will continue and probably strengthen further in the short term
- Most Q4 key balances are higher than their pre-recession levels in 2007
- Norfolk’s manufacturing export balances continued to increase
- Norfolk’s service sector domestic balances increased considerably
- On the basis of these results, the BCC believes GDP growth in Q4 2013 could be 0.9%
The British Chambers of Commerce’s Quarterly Economic Survey (QES) released today (Tuesday) provides further evidence that the UK economy is growing at a solid pace, and could even strengthen in the short term. The Q4 survey, made up of responses from nearly 8,000 businesses, shows improvements in most areas for both the manufacturing and service sectors, and that all key balances are stronger than their long-term historical averages.
In the manufacturing sector, key balances are at all time highs, and domestic balances in the services sector continue to break new ground. But the recovery must be maintained, as risks persist around access to finance for firms looking to expand, and rectifying this is vital in moving the Norfolk economy from being merely good to being truly great.
Key findings in the Q4 2013 Quarterly Economic Survey:
- For both Norfolk manufacturing and services, all the major Q4 balances are stronger than their long-term averages, and most are higher than their 2007 pre-recession levels.
- Key manufacturing balances remain strong, allaying fears in Q3 that the growth spurt in manufacturing was temporary: domestic orders (+21%), turnover confidence (+45%), and profitability confidence (+35%).
- Export balances in the Norfolk services sector are at record highs for the survey: export sales (+69%), and export orders (+66%).
- In addition, the services sector employment balance rose seven points to +24%.
- But some concerns do exist. In manufacturing, the key Norfolk balances for domestic sales and orders fell slightly, although these are still strong results.
- Manufacturing cashflow in Norfolk fell back from Q3, which underscores the need to promote access to finance, so businesses can expand to meet growing order books.
- Intentions to raise prices rose in both manufacturing and services, while inflation and corporation tax both remain major areas of concern for businesses.
Commenting on the results, Caroline Williams, Chief Executive of Norfolk Chamber of Commerce said: “It is a fantastic to start the New Year with a very positive quarterly survey. Confidence is high and our members are resolute in their determination to take the recovery from being good to being truly great. Firms from all sectors across the County believe they can create jobs, invest, and export. It is especially pleasing that the spurt in the manufacturing has proven not to be a fluke, which demonstrates the dynamism of our small, high value, manufacturing sector. But Norfolk businesses have major ambitions, and to be able to meet them, more support must be provided.”
“Cashflow continues to be an ongoing concern, and may hold businesses back from expanding to meet the growing levels of demand. We must give companies the opportunity to get the finance they need to go out and trade the world if we are to succeed in rebalancing the economy.”
Commenting on the results, John Longworth, Director General of the BCC, said: “As the 2015 General Election looms ever closer, the government cannot afford to get distracted by short-term political infighting. Long-term growth strategies must be delivered with a strong national consensus, particularly around the infrastructure investments that the country sorely needs. Only then will we have an environment that fosters enterprise and an economy which meets its true potential.”
David Kern, Chief Economist at the BCC, said: “With most key balances in this quarter higher than their pre-recession levels in 2007, it is clear that the UK recovery is likely to continue to strengthen in the short term. On the basis of these results, GDP growth in Q4 could well be around 0.9%, and higher full-year growth in 2013 and 2014 could follow. The optimism around medium-term growth prospects refutes the fashionable defeatist talk in some quarters of ‘secular stagnation’.
“The strong export and investment balances confirm that UK business is set to play a key role in rebalancing the economy. However while the overall message from this survey is positive, there are risks that should prevent complacency creeping in. The eurozone’s basic problems have not yet been resolved, which could adversely impact our exporters, and inflation remains a major concern.
“This means it is vital to prevent setbacks as the economic recovery gathers pace. The MPC must continue with its forward guidance on interest rates, and remain steadfast in its plans to keep inflation low and meet the 2% target. On its part, the government has to work to increase the flow of lending to growing businesses through a fully-funded Business Bank, to ease the logjam of those firms striving to expand.”
