Despite strong performances by exporters cashing in on the pound’s lower value during the earlier parts of 2017, businesses will be looking for greater certainty and support from Government next year and beyond.
That’s the underlying message of the responses to the East Midlands Chamber’s Quarterly Economic Survey for the final three months of 2017. Expected inflationary pressures, particularly arising from the cost of importing raw materials, resulted in a cooling of business confidence in the final quarter, but overall it remained strong.
The percentage of companies that reported confidence in turnover in Q4 was slightly down on Q3, but finished the year about ten percentage points higher than in Q4 2016. Confidence in profitability showed an even stronger finish to the year, up almost 20 percentage points over 12 months earlier.
Uncertainty about the future meant business expressing increased investment intentions throughout 2017 were fewer than in 2016 but, overall, ended the year about two percentage points higher than it started.
Recruitment difficulties remained a constant problem for businesses throughout the year, with 60% of respondents saying they had tried to recruit and 58% of them saying they’d struggled to find suitable candidates.
In the survey, 36% of respondents said they had recruited staff during the previous three months compared with just ten per cent that said they’d reduced their workforce.
Intentions to invest in equipment and training remained relatively weak in the fourth quarter compared with historic levels and the concerns about future price increases, which have been a feature of the past 12 months, remained.
Chris Hobson, the Chamber’s Director of Policy, said: “As we move into 2018, businesses will be looking for greater certainty and support to give them the confidence to invest and help grow productivity.
“The skills gap remains a key strategic issue for UK growth and one that Government policy needs to respond to in a meaningful way.
“Despite the uncertainty, however, the State of the Economy Index – compiled from the net results of the Quarterly Economic Survey – ended the year at 360, the second highest it’s been since Q2 2015.
“With Brexit talks now beginning to look at more positive things such as trading arrangements and the customs union, we hope that our negotiators will keep the needs of business to the fore so that we don’t lose momentum when it comes to confidence and investment plans.”