Global challenges mean UK economic growth will be “only moderate’ in next year says BCC Survey
2 October 2015
Only moderate economic growth can be expected for the UK during the next 12 months, according to the latest British Chambers of Commerce (BCC) Quarterly Economic Survey (QES).
The survey, based on 7,500 responses from firms employing around 800,000 people, shows that Britain’s ‘two-tier’ growth trend is continuing. While manufacturing and service balances were generally weaker in Q3 2015, manufacturing balances declined more greatly than for services.
The survey report says: “Most key national balances for the service sector dipped slightly on the previous quarter, although the balance for domestic sales recorded a healthy improvement. Overall, service sector balances remain relatively strong, indicating the sector’s overall health is still robust.
“Nearly all key national manufacturing balances remained stagnant or fell, painting a picture of prolonged, slow manufacturing growth. Notably, the balance of manufacturing firms exporting reached a six-year low.”
Key findings in the Q3 QES show that the UK recovery is facing serious global challenges.
Intentions to increase prices fell sharply in manufacturing, from+23% in Q2 to +8% in Q3 and rose slightly in services from +20% in Q2 to +23% in Q3. Meanwhile the percentage of firms operating at full capacity increased slightly in both main sectors.
In services, there were improvements from Q2 to Q3 in domestic sales from +31% to +36% and the balance for employment in the previous three months rose from +22% to +24%.
However, all other key service balances declined slightly between Q2 and Q3. Confidence in profitability went from +45% to +42%, investment in plant & machinery fell from +20% to +17% and employment expectations fell from +30% to +24%.
In manufacturing, the balances for exports, investment, confidence, employment expectations and cash flow all recorded falls between Q2 and Q3.
From Q2 2015 to Q3 2015 export sales fell from +14% to +10%, export orders fell from +15% to +10%, investment in training fell from +26% to +20%, confidence in turnover fell from +51% to +43%, confidence in profitability fell from +45% to +32%, employment growth expectations fell from +27% to +22% and cash flow fell from +11% to +9%.
The domestic manufacturing balances for sales and orders were both static at +20% and +18% respectively in Q3 2015, after weakening markedly in Q2 2015.
The main exception to the pattern of weaker manufacturing balances was a Q3 improvement in the balance of manufacturers who expanded their workforce in the last three months +20% in Q2 2015 to +28% in Q3 2015.
John Longworth, Director General of the British Chambers of Commerce, said: “ The real area of concern is manufacturing where export growth hit a six-year low. Services growth, on the other hand, dipped only slightly and overall trends show the sector remains relatively strong and stable.
“Global uncertainty, weakened demand from China and the strength of the pound are some of the factors likely to be hindering manufacturers’ performance.“
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