UK businesses step into Spring with confidence

Britain’s companies enjoyed a decent start to the year and are heading into spring with confidence, in positive news for the economy in the wake of the vote to leave the EU.

The British Chambers of Commerce (BCC) said its members were growing in confidence about turnover and profitability, although concerns remain over employment and inflationary pressure.

Responses from more than 7,000 businesses show “solid growth” in the manufacturing and services sectors, with both enjoying rises in domestic and export sales compared to the final quarter of 2016.

Manufacturing was singled out as doing particularly well, especially in the exports market, with higher numbers of firms reporting improved sales and orders than in previous quarters.

In services, while performance “has not returned to historic trend levels”, it is improving from its decline in the two quarters immediately following the EU referendum, the BCC said.

However, the rising cost of raw materials and overheads, inflationary pressures and recruitment difficulties are still causing problems for firms.

Dr Adam Marshall, BCC director-general, said short term prospects for business look strong, but warned about what could lie ahead.

“In the here and now, many businesses are resilient and experiencing solid growth. Many firms tell us their short-term expectations are strong, but that the medium-term picture is far from clear.

“The rise in inflation seen since last year's EU referendum is the biggest immediate pressure facing most firms. While manufacturers have enjoyed a good quarter, they are facing higher costs at the factory gates, which increasingly translates into companies having to raise their own prices.

“With inflation already above the Bank of England’s target, this squeeze on firms looks set to continue in the medium term.”

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