Business hopes Queen’s speech vote brings stability
29th June 2017
Posted on June 29th, 2017
Business is hoping for a period of stability after tonight when a vote by MPs on adoption of the Queen’s speech could determine whether Theresa May has a mandate to govern.
Confidence has been hit three times in the past two years with two General Elections and the outfall of the EU Referendum, but despite the uncertainties created by those events the regional economy has remained robust.
Business remains bullish about the future, according to the latest research by East Midlands Chamber* covering the second quarter of the year.
But recruitment remains a perennial issue for employers and there are still concerns over future price rises and their impact on margins.
In the Chamber’s Quarterly Economic Survey for Q2 2017, 43% of respondents reported growth in domestic performance in the second three months of the year and 40% expected improvements in the third quarter.
A further 37% said performance had remained constant and 45% expected consistency over the next three months.
A similar picture emerged for performance in overseas markets where the significant growth recorded in the post-referendum period of 2016 continued unabated in both the first and second quarters of 2017.
With continuing political uncertainty, almost two-thirds of respondents (63%) said they expected prices to remain about the same over the coming three months but a third (32%) said they expected prices to rise in the short term, suggesting continued upward pressure on inflation as the year progresses.
The volatility of exchange rates continues to inhibit the ability of exporters to plan ahead, the survey showed. Although advantageous for companies manufacturing in the UK and exporting, the relatively weak pound creates challenges for importers.
As a result of the weakened pound, inflation has risen to 2.9%, a rate not seen since Q2 2013. With inflation expected to continue through the latter stages of 2017, evidence suggests companies will eventually pass cost increases on to customers.
Business confidence in respect of both profitability and turnover remained relatively robust in Q2 2017. Two-thirds (67%) of respondents said they anticipated turnover would increase in the coming three months, with 57% expecting profitability to increase in the short-term.
Almost two-thirds of companies (64%) said they expected their labour force to remain constant. Respondents said they continued to have difficulty recruiting suitably-skilled staff, particularly to professional and managerial roles.
“With Brexit negotiations now underway, it is essential that Government works with businesses in this region to ensure the real life experiences of the wealth generators informs the discussions that take place.
“However, while the these negotiations will inevitably form the backdrop against which the economy performs over coming months, the day-to-day concerns of business relate more strongly to the domestic issues that remain in our gift to control.
“As we look to show the UK as a being a place for investment and where business gets done, it is essential that we inject momentum into major local and national infrastructure schemes that have already been agreed and announced.
“We need to cut back on the high upfront costs that businesses face – around things such as business rates and employment – and move forward with an industrial strategy that recognises the strengths of what East Midlands businesses bring to the national economy.
“Uncertainty is a killer of confidence. More than anything, businesses want to see a functioning and capable Government that can deliver on the day-to-day priorities of businesses and communities as well as handle the strategic discussions that must now take place.
“A strong partnership between Government and business has to be a cornerstone of making this happen.”
