The UK economy ended 2018 “stuck in a weak holding pattern”, according to what is billed as the UK’s largest private sector survey of business sentiment and a top indicator of UK gross domestic product growth.
The latest quarterly economic survey from the British Chambers of Commerce, published today and covering some 6,000 firms with a million-plus employees collectively – has flagged “stagnating” levels of growth and business confidence due to elevated Brexit uncertainty and other economic pressures.
Suren Thiru, the BCC’s head of economics, said the survey suggests UK economic conditions were “worryingly subdued” during the final quarter of 2018. The business body said the findings highlight the impact current levels of uncertainty are having on a “stalling” economy as growth in domestic sales and orders fell, recruitment difficulties sit near record highs and price pressures persist.
Looking at services firms, a key driver of UK economic growth, the percentage reporting an increase in domestic sales and orders fell to a two-year low – dropping from +22 to +18 and from +17 to +14 respectively.
It also saw recruitment difficulties hover at a near record-high, at 70 per cent, down slightly from the 72 per cent seen in the previous quarter, while the percentage looking to recruit rose to 50 per cent.
Additionally, struggles in hiring were the joint highest since the survey began in 1989 in the manufacturing sector, reported by more than four-fifths of firms, and those attempting to recruit remain unchanged at about two-thirds.
The BCC survey said the results “highlight the extent to which labour shortages have risen in the UK”, and indicate an increase in price pressures facing firms.
The percentage of manufacturers expecting to raise prices is at its highest in a year, at +43, up from +38 in the third quarter, and almost three times higher than its pre-EU referendum average.
Cashflow continues to be a concern for both sectors, with the balance of firms reporting improved cash flow remaining weak. The BCC called on all political parties to “find a way forward and ensure that the UK does not face a messy and disorderly exit from the EU”, helping boost business confidence and investment.
Adam Marshall, BCC director general, said: “Throughout much of 2018, UK businesses were subjected to a barrage of political noise and drama, so it’s no surprise to see firms report muted domestic demand and investment. In this new year, the government must demonstrate that it is ready to act to turbo-charge business confidence.”
He said the UK government should focus on providing clarity on conditions in the short term and avoid a “messy and disorderly” Brexit. “Business communities won’t forgive politicians who allow this to happen, by default or otherwise.”