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7 WINTER 2016 NEWS BCC Quarterly Economic Survey: Economic uncertainty impacting upon local business confidence The British Chambers of Commerce (BCC) Quarterly Economic Survey – Britain’s largest and most authoritative private sector business survey, based on more than 7,000 responses from firms in Q3 2016 – shows a mixed picture, with an improved short-term performance in the manufacturing sector set against a further slowdown in growth in the services sector. The results of the Liverpool and Sefton area survey is reflective of a period of fluctuation, uncertainty and political upheaval with overall growth trends down against previous periods and, in some areas, actually falling. Whilst the majority of responses gleaned was indicative of continued economic growth, the rate of growth was undoubtedly reduced. Perhaps most pertinent were the projections of business turnover and profitability and overall business confidence which was markedly reduced in the quarter. The key highlights of the survey results were: • An increasingly slow pace of growth being reported in UK and international sales in both service and manufacturing sector companies including: • A flat-lining of service sector UK sales • A negative balance of firms reporting domestic orders on the books for the first time since 2011, -6% of manufacturers and -8% in services • Reduction in international sales growth in manufacturing respondents to +8 from previous quarter of +15 A continuing trend of reduced overseas orders in manufacturing from +29 to +15. • A negative balance of service-sector firms reported increases in workforce during the past three months with the same respondents reporting a decreasing demand for new recruits over the coming quarter. • Both services and manufacturing companies reported huge difficulties recruiting appropriately trained staff in the quarter; 89% of manufacturing respondents and 85% service companies reported this problem. • A negative balance of firms reported increasingly problematic cashflow positions across both sectors; -7% manufacturing and -2% services. • Investment in training and equipment continued to reduce as did business confidence in achieving profitability in the coming 12 months, most likely stimulated by the uncertainty of the EU referendum vote. The local survey results mirrored the national trend in suggesting that near-term uncertainty following the vote to leave the European Union has led businesses to lower their expectations for hiring, turnover, and investment in plant, machinery, and training. Jenny Stewart, CEO of the Liverpool & Sefton Chambers of Commerce commented: “These results are unsurprisingly reflective of the period of economic and political upheaval our country has been through. The government’s actions in the aftermath of the vote to leave the EU have been based largely on rhetoric at the expense of clear, strategically defined plans upon which business can prepare. The subsequent uncertainty has been felt by business and is imprinted in these survey results at both a local and national level.” Brian McCann, Chair of MC Vanguard (sponsors of the local QES) commented: “Inevitably there is evidence of a post Brexit slow down. What really matters now is how businesses and support agencies react so that we can take advantage of the new opportunities post Brexit for wider trade links, helped by a lower exchange rate and also manage the risks brought about by higher inflation and a probable slow down in consumer spending.  The trade mission to China (led by Liverpool & Wirral councils working together) is a great example of taking advantage of wider trade opportunities. Many Liverpool businesses including MC Vanguard are already investing in additional specialist resource to focus on opportunities in China.”


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