UK manufacturers are at their least confident about increasing turnover and profit since the very heart of recession, according to a survey of over 6,000 businesses.
The British Chambers of Commerce’s latest Quarterly Economic Survey (QES), released today, finds that the economic climate is currently ‘mediocre and disappointing, particularly for manufacturing’.
Manufacturers report much less confidence in their prospects for the next 12 months than they did in Q4 2010. Indeed, confidence levels are at their lowest since Q1 2009
Outlooks have been hit by the recent adverse weather conditions, cashflow and price pressures and a fall in domestic and export orders, although the latter in particular remains relatively healthy. 80% of manufacturing firms state that the cost of raw materials is intensifying pressures to raise prices.
“The Q1 QES results highlight the fragility of the UK economy in the early months of 2011, following the increase in VAT and the first wave of the Government’s tough spending cuts,” said David Kern, Chief Economist at the BCC.
“Benefiting from a competitive exchange rate, manufacturing still has the potential to drive the UK recovery. But the international background has become riskier for Britain’s exporters, while the domestic austerity plan will intensify pressures on businesses and consumers.”
He urged the Monetary Policy Committee to resist raising rates as this could further hinder the economy.