Posted by

Tom Nolan, Policy Adviser

08 Jan 2013

Since 1989 the BCC has been conducting a quarterly economic survey of businesses throughout the country. It is now is the largest and most representative of its kind and has gained a reputation as one of the UK’s most reliable economic indicators. This quarter the survey received over 7,500 responses, of which almost half were exporters.

The Q4 2012 results show welcome progress compared with Q3 but many balances are still weak by historical standards. The economy is facing major challenges however the results reveal resilience amongst UK businesses with rising confidence that the outlook will improve. For both manufacturing and services almost all the key Q4 balances are stronger than they were in Q3.  Despite this however domestic balances remain well below their pre-recession levels in 2007. The export balances are also below their 2007 levels for manufacturing, but are higher than in 2007 for services.

Investment balances strengthened in Q4, but are viewed as inadequate.  Cashflow balances, though higher, are weak with service cashflow still negative. Confidence is still weak by historical standards, particularly in services, but the marked increase in confidence in Q4 reinforces our view that the economy will recover slowly in 2013.  Plans to raise prices are higher, notably in manufacturing; but it is questionable if these price intentions can be realised in the face of weak demand. Inflation remains a major concern for businesses in both sectors.

Overall the results show that the economy is making slight progress but economic growth remains too weak and we are calling on the government to bring forward bold measures to speed-up economic recovery.  Measures announced in the Autumn Statement must be built upon in particular we would like to see greater efforts to unlock massive private funding to renew Britain's infrastructure that will create confidence in the short-term, jobs in the medium-term and growth in the long-term.