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31 August 2017

East of England business confidence falls back to negative territory

Business confidence in the East of England has fallen back into negative territory, reversing the gains made in Q2 2017, according to the latest ICAEW Business Confidence Monitor™ (BCM). A snap general election, the hung parliament and the hesitant progress of negotiations with the EU has meant businesses in the region are now adopting a more cautious, wait-and-see approach.

Q3 East of England BCM key findings:

  • The latest Business Confidence Monitor for the East of England stands at -10.1 this quarter
  • Export growth is expected to slow to 3% in the year ahead, while domestic sales growth slows to 3.3% - well down on the rates achieved in 2014-15
  • A lack of customer demand is a growing concern for 48% of businesses, the highest proportion since Q1 2013
  • Input prices have increased by 3.1% - the fastest rate for 6 years
  • Labour cost increases are being held at rates very similar to the last 12 months with total salaries rising by 2.2%
  • Profits growth is expected to remain at 3.7% for the second year in succession
  • Investment will continue to grow, but more focused on capital investment (growth of 3.1% expected in the year ahead) rather than R&D (1.4%) or staff development (1.1%).

Andrea Dunhill, ICAEW East of England Regional Director said:

"The fall back into negative territory in the East of England is not unexpected. Since the announcement of the general election, a vacuum has been left with Government's attention swallowed by a hung parliament and the start of EU negotiations.

"If they haven't already, businesses in the East of England need to look beyond the next few months to a future where innovation and investment now will create a longer term return. They need to be investing in talent, new products and services as well as exploring new markets to help ensure they are positioned to take advantage of the opportunities that will be there once the UK leaves the European Union. Government also needs to articulate what transitional arrangements will look like for the East of England - planning must start now and businesses cannot wait until early 2019 to find out."

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