Posted by

Tom Nolan, Policy Adviser

03 Oct 2012

Since 1989 we have been conducting a quarterly economic survey of businesses throughout the country. The survey 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 results showed that economic growth in the UK remains weak, with Q3 results slightly down on the previous quarter. For both manufacturing and services, almost all the key Q3 balances have worsened compared with Q2. While domestic balances signal stagnation, it is concerning that the forward-looking balances for home orders have moved into negative territory. It is also concerning that improvements in export balances, as seen in previous quarters, have suffered setbacks.

Service export balances are still healthy by historical standards. But manufacturing export balances recorded marked falls in Q3, and are now well below their average 2007 pre-recession levels. Confidence balances worsened for manufacturing, and are weak by long-term historical standards for both sectors. All the investment balances fell and are inadequate. Cashflow balances worsened, and are in negative territory for both sectors. Plans to raise prices, though higher for manufacturing, are relatively muted overall; but inflation remains a significant concern for businesses in both sectors.

Overall the results confirm that improvements in the UK’s economic performance remain inadequate and that the economy is stagnant. It strengthens our calls for the government to bring forward bold measures to help the economy return to growth.

There is much that can be done relatively quickly, such as the introduction of a Growth Voucher scheme offering 20,000 small businesses £5,000 worth of advice to jump start investment and expansion plans. Then they are the more complex measures that will have long lasting benefits that the government must get on with implementing now. These include plans to create the Business Bank that was announced at the Liberal Democrat annual conference last week, and supporting new schemes to kick-start housing, transport and energy projects.