This week the British Chambers of Commerce released the national Quarterly Economic Survey results indicating that there has been a further deterioration in the UK economic situation and there is likely to be a stagnation in the first quarter of 2012.
The BCC is keen to point out that these results do not necessarily indicate that a recession is a foregone conclusion. The concern with the national picture is that demand measures have weakened, particularly the domestic market, and exports are slowing. With uncertainty over future demand from consumers and the country’s largest export market the Eurozone, business confidence has weakened along with intentions to invest in the coming months.
A clear sign of this lack of business confidence is the increasing numbers of businesses operating at capacity, yet there is a lack of investment intentions to create more capacity. As businesses are holding back with investment they are also holding back on their recruitment plans, so national unemployment is likely to increase beyond the current 2.64 million.
But how does Greater Manchester compare with the national picture. We already know that the area outperformed the regional picture, and indeed Greater Manchester for this quarter is outperforming the national picture also. Demand in the domestic economy is stronger in Greater Manchester for manufacturing, despite the challenges faced in the construction sector, and service sector demand is stronger as a result of the city centre’s financial and professional services.
Export demand for manufacturing is similar to the national picture, although service sector export demand is weaker. Greater Manchester’s job creation has outpaced the national picture, though this is weakening moving forward and looking similar to the national picture. It would seem that business confidence in our area is weakening in the same way as the national results, and leading in turn to an unwillingness to invest. We have seen the impact of the Eurozone crisis over the last two quarters’ results for Greater Manchester, and there is continued uncertainty over how that will pan out, but there is uncertainty also over domestic demand by consumers moving ahead as unemployment continues to increase.
Future growth will only come from investment. The Government’s Autumn Statement announced a package of investment and support for businesses that we warmly welcomed. What we need now is for those words to be put into action and for money to reach businesses and projects to get underway as quickly as possible.
There have been delays with Regional Growth Fund monies reaching the successful bidders as a result of due diligence, delays that cannot be repeated. But we must also look at bringing forward major infrastructure projects that will help create the confidence for businesses to start-up here or encourage foreign investment, to create jobs knowing that they can move their freight and people easily and efficiently. Changes to employment legislation, lengthy and complex planning processes and skills also have an important role in supporting business confidence by creating an environment of certainty that supports, not hinders job creation.
A recession is by no means inevitable, and given the right support our region is better placed than most to meet the challenges ahead.