Business West’s local business survey found that business confidence fell by 7% in Q4 of 2016, to reach the lowest reading recorded in the survey in recent times. This marks a steep decline from the final quarter of 2015 – falling 19% year on year.
There were however signs that the regional economy was performing better than the third quarter of the year. UK sales and orders and export sales and orders all rose between quarter 3 and quarter 4, whilst hiring was in positive territory. This chimes with national surveys that have highlighted recent stronger performances in manufacturing and services.
However, comparing the year-on-year performance, 2016 saw declines in all categories, except export orders and current workforce.
The survey shows that events in 2016 are still hanging heavy on business sentiment – with companies facing critical uncertainties around the nature of the UK’s post-Brexit relationship with the EU in particular. At the same time it highlights some of the upsides of weaker sterling and a strong national and local employment market.
Matt Griffith, Director of Policy, Business West, commented:
“Business confidence took a sharp dive downwards in the last part of 2016. The last time confidence was at this level was just after the 2012 ‘omni shambles’ budget when the economy was suffering a short term contraction. In contrast the wider economy currently looks more resilient than predicted – however sterling volatility and underlying concerns about the outcome of Brexit negotiations may be unnerving businesses over future economic conditions.
“With the long-term growth performance of the UK economy projected to ease in the next two years and with inflation expected to rise, 2017 will be an important year for business. It is vital that government continues to support measures to drive infrastructure investment in transport, housing and business support. It is equally important that government moves to shore up business confidence given the level of uncertainty in the economy."
About the Survey:
Data from Business West’s Local Business Survey feeds into the British Chamber of Commerce’s (BCC) Quarterly Economic Survey, to give an indication of business confidence and trading conditions over the past three months.