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Our team of economic research experts provide in-depth analysis and reports on topical economic, financial and industry issues.
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The past six months have been difficult for the UK economy, as onging economic concerns in the euro area, as well as signs of broader global economic slowdown, have served to increase the level of caution among businesses regarding business prospects.
We have had official confirmation that the economy has fallen back into recession, albeit a relatively mild one - an outturn that was slightly weaker than the broadly flat to marginally negative profile indicated by our previous survey in January. The first half of the year has therefore been more challenging than anticipated, as evidenced by declines in the net balances for key economic indicators in our survey. Indeed, the indicators for sales, orders and profits for the past six months fell to the lowest levels since the economy emerged from the last recession in mid-2009.
There are some glimmers of hope, however, in the latest survey which draws on the responses of nearly 1,800 businesses up and down the country and across all industry sectors. The results suggest that overall business confidence has risen modestly, driven by improvements in sales and orders, though it remains at relatively low levels consistent with a profile of weakly positive growth. There is still a stark contrast between anticipated export sales to Europe and to the rest of the world, with a further weakening in the former expected in the next six months. While exports to the rest of the world remain relatively strong, they are also anticipated to ease from levels experienced six to twelve months ago. Domestically, weak demand remains a key concern among businesses, though this seems to have eased compared with recent surveys. Nevertheless, significant challenges remain for many businesses operating in consumer-facing sectors, as well as in construction. Businesses in manufacturing, healthcare and business services were somewhat more optimistic about prospects. Overall employment and investment prospects while better than six months ago, remain subdued.
I am very grateful to all of you that have assisted us in responding to the survey and in helping to provide such a comprehensive view of developments in the UK economy. I would like to wish you every success and look forward to supporting you through these challenging economic circumstances.
Sales and orders disappoint in the past six months.
Some glimmers of hope in the next six months.
The ability to compete internationally has fallen.
Hiring and investment intentions slightly less weak.
Output price inflation ease, while profits remain under pressure.
Overall business confidence improved slightly, but remains relatively subdued.
Business confidence strongest in business services and manufacturing.
Employment intentions improve across most sectors.
Business confidence rose in most regions.
Employment intentions improve in almost all regions.
Business confidence improves most for smaller SMEs.
Investment intentions improved in all turnover categories.