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October 10, 2014

BCC calls for action as slowdown raises alarm

BCC calls for action as slowdown raises alarmThe latest Quarterly Economic Survey from the British Chambers of Commerce (BCC) shows that there has been a slowdown in the third quarter of 2014.

The survey of more than 7,000 businesses found that balances for both manufacturing and service sector exports were down on the quarter.

In manufacturing, two balances fell steeply in Q3 2014 – domestic sales (+23%, down from +42% in Q2) and domestic orders (+24%, down from +41% in Q2). In addition, all export balances fell in Q3. Manufacturing export sales fell from +30% in Q2 to +16% in Q3, while service export sales dropped by 17 points to +14%.

Even so, business confidence remains higher than the 2007 pre-recession levels for both manufacturing profitability (+54%) and service sector profitability (+45%).

John Longworth, BCC director general, said that these may be the “first alarm bell” to warn of slower economic growth.

At this week’s BCC international trade conference, Longworth called on business and government to work together. He said: “We know that when businesses do have a go at exporting, they grow, on average, 20% more than businesses that don’t export. It’s not rocket science, but it is challenging. We need to bring together our collective expertise, business and government ... and focus on solving the challenges.”

The BCC is recommending that all political parties show support for the proposals within its business manifesto – A Business Plan for Britain – to create the best possible environment for growth and enterprise.

Longworth has also warned against early interest rate rises: “We may be hearing the first alarm bell for the UK economy, but this need not be the case. The share of manufacturing firms operating at full capacity fell in Q3, signalling that there is more spare capacity in our production sector than previously thought. Concerns over the strength of the pound are also high and rising. Together with a worsening outlook for the eurozone, these factors reinforce the case against an early interest rate rise.”

He added: “The strong upsurge in UK manufacturing at the start of the year appears to have run its course. The disappointing decline in exports highlights that we must do something radically different. We must waste no time in supporting trade opportunities to overseas markets which offer sustained growth.”

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