Birmingham firms resilient in face of a government failing to inspire confidence

Businesses in Greater Birmingham have demonstrated resilience to declining trends by maintaining sales both at home and abroad, the area’s chamber of commerce has said.

The Greater Birmingham Chambers of Commerce said this was more important than ever as it criticised the new Government for failing to do enough to bolster confidence.

Speaking at the publication of the chamber’s second Quarterly Economic Business Report of 2017. Chief executive Paul Faulkner said: “Our QBR results show once again the amazing resilience and tenacity of our region’s businesses – continuing to maintain and grow trade and profitability despite uncertainty.”

The report reveals that confidence remains high among local businesses. Manufacturing sector firms posted a percentage balance score of 65 on expectations of profitability and services sector firms a score of 72. Percentage balance scores are out of a possible 100 and scores of over 50 demonstrate a positive sentiment.

However, these scores, while positive, were lower than the previous quarter’s results (77 for manufacturing and 79 for services sector firms).

Mr Faulkner added: “Anecdotal evidence from our members suggests that the Government needs to do more to bolster business confidence.

“We will be urging politicians to put rivalries to one side to ensure they promote the economic wellbeing of the nation and formulate a policy programme which fosters entrepreneurialism and allows our businesses to reach their full potential.”

The report shows both sectors had a positive quarter in terms of sales, with 49% of businesses in the region experiencing an increase in domestic sales over the past three months and 35% an increase in export sales.

The proportion of firms expecting to increase prices fell to one third (33%) from 42% last quarter, while almost two thirds (63%) said their prices would stay the same. This was the first quarter that there has been a fall in the proportion of firms expecting to raise their prices since Q3 2016.

Professor Julian Beer, deputy vice-chancellor of Birmingham City University – which sponsored the report, said: “Business sentiment remains positive a year on from the Brexit referendum result despite the uncertainty created by a minority Parliamentary administration.

“Although business sentiment is robust, it has noticeably eased from previous highs according to the latest QES release.  While business respondents continue to state that output and new orders are strong, there is some evidence that performance is easing.

“Furthermore, the impact of Sterling, contributing to higher import costs, coupled with tight labour market conditions, is contributing to inflationary pressures.  Overall, however, economic conditions and indeed prospects remain favourable, notwithstanding the confusing political environment.”

In light of the election result, the chamber has written to every MP in the Greater Birmingham region to invite them to meet and discuss the needs of businesses.

Elsewhere, Lloyds Bank said business confidence in the West Midlands had risen to an 18-month high in the last six months.

According to its latest Business in Britain report, the confidence index – an average of respondents’ expected sales, orders and profits over the next six months – increased to 22%, from January’s score of 1% and from 13% immediately following the EU referendum vote.

The Business in Britain report, now in its 25th year, gathers the views of more than 1,500 UK companies, predominantly SMEs, and tracks the overall balance of opinion on a range of important performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative.

Although the West Midlands is one of the least confident regions across the UK, the region saw the biggest increase in confidence since January.  But while it outstripped London, it fell behind Wales, the North East and South East.

Mark Cadwallader, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “Overall confidence in the West Midlands has increased significantly since our last survey in January, and is up on our report from last September.