UK business hits the brakes: 2019’s first quarterly report from the Chambers of Commerce.
PS we refuse to take part in a recession. Business is booming here 👍
Confused? Well yes!
How do you fix the 2020 problem without breaking the bank? Are we facing a massive recession? Is Brexit a cloud with a silver or maybe even gold lining? Are we just putting a brave face on things as we rearrange the deck chairs on the titanic? Is it boom or bust?
With all this going on companies are expected to managed the phasing out of old technology and take on increased business obligations with all the associated costs and risks. To make your tech decisions easier, LIS has finance options which can spread the costs over many years, including hardware, maintenance, support and setup. We can increase business efficiency through automation and systems integration. If you need to look at ways to improve your IT without monster cost then contact LIS and we will give honest, realistic, professional advice.
The British Chambers of Commerce?s quarterly economic survey ? the largest private sector survey of business sentiment and leading indicator of UK GDP growth ? found that key indicators of UK economic health weakened considerably in the first quarter of 2019. The balance of services firms reporting a rise in export sales at its lowest level in a decade The balance of firms reporting improved cashflow turned negative for the first time since 2012 Investment intentions in both manufacturing and services sectors at lowest level for eight years Against a backdrop of a slowing global economy, escalating Brexit uncertainty, and rises in business costs as the UK enters a new tax year, the latest results from the survey of over 7,000 businesses ? employing around one million people ? reflect a deterioration in many gauges of the UK?s economic strength. In the services sector, the percentage balance of firms reporting an increase in export sales stood at zero, its weakest level since 2009 and the orders balance turned negative (more firms reporting that orders have decreased than those reporting an increase) for the first time in eight years. The balance of firms reporting improved domestic sales and orders also weakened significantly in the quarter. Among manufacturers, the percentage of firms reporting an increase in domestic and export sales and orders dropped back to their 2016 levels. The balance of firms reporting improved cashflow ? a key indicator of business health ? and which has been declining over recent years, has now gone into negative territory for the first time since 2012. The lack of clarity over the UK?s future relationship with the EU is continuing to weigh on investment intentions in both the manufacturing and services sectors. The balance of firms who looked to invest in either plant and machinery or training dropped in both sectors to their lowest level in eight years. Business confidence in profitability and turnover also deteriorated sharply in the quarter. The leading business group has been calling for an end to the relentless uncertainty, which as the latest results from the long-standing business survey highlight, has damaged the confidence and investment plans of business communities. Westminster must ensure that a messy and disorderly exit is avoided and provide firms with certainty on future conditions to prevent further declines. To kickstart strong growth in the economy, government must return its attention and energy to removing barriers to growth in the domestic environment. Ill-timed increases in business costs ? including compliance with Making Tax Digital, higher business rates for some firms, increased employer pension contribution requirements, and more ? are also raising costs pressures for companies across the UK at a time when government should be looking to reduce rather than increase burdens. Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said: ?Our latest survey suggests that UK growth nearly ground to a halt in the first quarter of 2019, with increasing anxiety over Brexit and weakening global economic conditions driving a significant deterioration in almost all the key indicators in the quarter. ?The services sector suffered the more substantial loss of momentum in the first quarter with both domestic and international activity slowing sharply in the quarter. The manufacturing sector continues to struggle amid tougher global and domestic trading conditions and rising cost pressures. The marked decline in the export indicators in both sectors suggests that net trade is likely to have been a drag on UK GDP growth in Q1. The deterioration in cash flow is concerning as it can leave firms more vulnerable to external shocks, including disruptions to supply chains. ?The forward-looking indicators are disappointingly downbeat with weakening orders, confidence and investment intentions pointing to precious little growth over the coming quarters, unless substantial action is taken.? Reacting to the Q1 results, Dr Adam Marshall, Director General of the British Chambers of Commerce, said: ?Our findings should serve as a clear warning that the ongoing impasse at Westminster is contributing to a sharp slowdown in the real economy across the UK. Business is hitting the brakes ? hard. ?These are some of the weakest figures we?ve seen in nearly a decade, and that?s no coincidence. The prospect of a messy and disorderly exit from the EU is weighing heavily on the UK economy, and must still be avoided. The unwanted prospect of a disorderly ?no deal? exit, and the serious damage and dislocation it would bring, is still just days away unless Parliament acts to avoid it. ?At the same time that firms are having to enact costly contingency plans, the cost of doing business here in the UK continues to rise. This week seesa new tax year with a number of changes adding to the upfront cost of doing business in the UK, including the introduction of Making Tax Digital and changes to auto-enrolment, leaving many firms facing more bureaucracy and new expenses. It beggars belief that ministers are piling on more and more costly obligations at a time that businesses are already having to cope with Brexit and uncertainty. ?For too long Brexit tunnel-vision has distracted government from fixing the fundamentals to support growth here in the UK. We need to see an increased focus on creating the conditions for business success here at home ? including concerted efforts to plug growing labour shortages, delivering an immigration policy that works for business and speeding up physical and digital infrastructure projects.? Key findings in the Q1 2019 survey: Manufacturing sector: The balance of firms reporting increased domestic sales fell six points to +15, while those reporting improved domestic orders also fell from +16 to +9 ? both are at their weakest level since Q4 2016 The balance of firms reporting improved export sales fell from +20 to +14, and the balance of firms reporting improved export orders dropped from +18 to +10 ? both their weakest since 2016 The balance of firms reporting improved cashflow dropped into negative territory for the first time since Q3 2012, standing at -1 (down from +10) The percentage of firms attempting to recruit fell from 67% to 62%, the weakest since Q1 2012. Of those, 79% reported recruitment difficulties, close to its record high The balance of firms increasing investment in plant/machinery fell in the quarter from +18 to +6, the weakest since Q4 2011, and investment in training from +19 and +14, weakest since Q3 2012 The balance of firms confident that turnover and profitability will increase in the next 12 months fell, from +41 to +26 for turnover and +27 to +13 for profitability ? both are at their weakest since Q4 2011 Services sector: The balance of firms reporting increased domestic sales fell from +18 to +10, the weakest since Q3 2016. Those reporting improved domestic orders fell from +14 to +5, the lowest since Q3 2012 The balance of firms reporting improved export sales fell from +14 to +0, the weakest since Q2 2009. Those reporting improved export orders dropped from +9 to -2, reaching negative territory for the first time since Q4 2011 The balance of firms reporting improved cashflow dropped in negative territory for the first time since Q4 2012, falling from +6 to -1 The percentage of firms looking to recruit fell slightly to 48%. Of those, 70% had recruitment difficulties ? the same as in the previous quarter, close to its record high The balance of firms looking to increase investment in plant and machinery fell from +10 to +1 (weakest since Q3 2011), and from +15 to +10 in training (lowest since Q3 2012) The balance of firms confident that turnover and profitability will improve over the next year fell slightly, from +37 to +26 for turnover (lowest since Q4 2011) and +28 to +19 in profitability (weakest since Q3 2016). Ends Notes to editors: Spokespeople are available for interview and a full QES is available from the press office. The BCC Q1 2019 QES is made up of responses from more than 7,000 businesses across the UK employing around one million people and is the largest independent business survey in the country. 1744 are manufacturers (25% of the overall sample), 5340 are service firms (75% of the overall sample)and 94% of respondents are SMEs (firms with fewer than 250 employees).Firms were questioned between 18 February and 11 March 2019 on a wide range of business issues, including: domestic sales and orders; export sales and orders; employment prospects; investment prospects; recruitment difficulties; cashflow; confidence; and price pressures. How are balances calculated? QES results are generally presented as balance figures – the percentage of firms that reported an increase minus the percentage that reported a decrease. If the figure is a plus it indicates expansion of activity and if the figure is a minus it indicates contraction of activity. A figure above 0 indicates growth, while a figure below 0 indicates contraction. For example, if 50% of firms told us their sales grew and 18% said they decreased the balance for the quarter is +32% (an expansion). If 32% told us their sales grew and 33% said they fell the balance is -1% (a contraction).
Looking for business growth investment? The ups and downs of peer-to-peer finance.
If you are struggling with funding the upgrades to solve the 2020 problem then consider peer finance. Don’t forget alternatives such as hardware-as-a-service, and traditional leasing (including LIS Managed Services in the lease as well as installation, support, maintenance).