The British Chambers of Commerce’s Quarterly Economic Survey (QES) shows that the economy is recovering, but risks at home and abroad that could derail this process.
The new survey, made up of responses from over 7,400 businesses, shows that most key balances strengthened in the second quarter 2013 compared with the previous quarter.
Export balances remain strong, with the services export deliveries balance reaching its highest level (+36 per cent) since the survey began. Employment balances have risen also after they fell in the previous quarter.
Despite these improvements, most indicators remain below their 2007 pre-recession levels, and cashflow remains weak.
The findings suggest that the economy will continue to strengthen gradually over the next year, with growth slowly improving. The results also demonstrate resilience among UK businesses, who continue to feel confident and are looking to invest and increase exports this year.
In a statement David Kern, BCC chief economist, said, ‘The improvement in most key balances in our Q2 survey supports our view that the UK upturn is slowly strengthening.
‘However serious risks remain for the economy at home and abroad. Domestic inflation has increased again, and this risks worsening the squeeze on businesses and consumers. Looking abroad, with the US planning to reduce its stimulus and continued problems with the eurozone, our exporters continue to face difficulties in selling their wares overseas.’
Key findings from the manufacturing sector:
Employment balances rose in Q2, following their Q1 decline. In manufacturing, the balance improved from +11 per cent in Q1 to +19 per cent in Q2
Confidence that turnover will improve rose seven points to +51 per cent
Profitability confidence rose from +33 per cent to +39 per cent
Firms looking to increase investment in plant and machinery rose nine points to +23 per cent
Pressure to raise prices continued to ease in Q2. In manufacturing, this fell by five points to +12 per cent, with many citing reduced pressures from raw materials
Cashflow for increased two points to +4 per cent