For more than 20 years, the British Chambers of Commerce has been conducting a survey each quarter to gain an understanding of business sentiment across the UK. With the survey regularly attracting between 7-8000 responses it is now the largest independent survey of its kind in the UK, and has a reputation as one the country’s most reliable indicators of how the real economy is performing.
The results for the second quarter, published this week, show the economy has made further progress, but there are still some risks that could derail the recovery. Most key balances strengthened in Q2 compared with the previous quarter. Export balances in particular remain strong, with the export deliveries in the service sector reaching its highest level since our survey began. More than 2,000 of the businesses who responded to the survey were service firms that export, so it is clear this is one section of the economy that is experiencing real growth.
Other positives include the rise in the employment balances, after a dip in the previous quarter. There was also a significant increase in confidence over the next year for both manufacturing and service firms.
While the results are encouraging, it is important to note that with the exception of service export balances, most indicators still remain below their 2007 pre-recession levels. So there is growth in the economy, but it is nowhere near strong enough. Cashflow also remains weak, while service investment fell in the quarter – both of which are a concern.
Upon reviewing the results, we always ask the question: can the recovery go faster with the right support from the government? If future surveys are to return better results, business will want to see a swift delivery of the infrastructure boost promised in the Spending Review, more support for exporters seeking to enter new markets, and far more action on accessing finance for growing companies.
Written by Tom Nolan, Policy Advisor at the British Chamber of Commerce