The next ICAEW Business Confidence Monitor (BCM) quarterly figures have been released. And they do show some signs for encouragement.
Entitled ‘Business profits set to grow, despite lack of confidence’, the release starts:
‘While UK plc is struggling to find confidence, there are some reasons to be cheerful’.
Good. So, what reasons?
‘Companies have seen improvements in profit growth, capital investment and sales volumes and are expecting continuing growth in 2018’, says the release.
It lists ‘Key findings for Q4 2017’:
• The BCM ‘remains in negative territory’, but not so far below zero as it was after ‘the shock of the General Election’ – i.e. it’s risen from -8 in Q3 to -3.4 in Q4
• Profits have grown – ‘rising from 3.4% in Q3 to 4.1%’. And the trend’s anticipated to continue ‘consistent with rising sales and a slowdown in input price inflation’
• Slow GDP (gross domestic product) growth ‘is forecast for Q4 at 0.2%’, says the release; this follow Office of National Statistics figures of 0.4% growth in the previous quarter
• ‘Domestic sales growth remains steady while export sales are slowly improving with higher growth expected in the year ahead’, it says
• Businesses expect to continue creating jobs, and steadily increase salaries – ‘indicating that a price-wage spiral is not a major risk’
All in all, then, however we may feel about things, the facts look promising. At least around business.
Fingers crossed, we can all move gingerly forward.
Michael Izza, ICAEW Chief Executive, commented.
‘While businesses are struggling to be confident in the current environment’, says Michael Izza, ‘there are reasons to be more optimistic.’
Here are some reasons: ‘Businesses are controlling costs and there is finally some improvement, though small, in export sales growth.’
And it’s looking good across various sectors.
‘The IT, Construction and Business Services sector are all modestly positive. Even the retail sector has seen an improvement in confidence’, he says, ‘– albeit still in negative territory.’
But he’s also emphatic there’s no room for complacency. Instead, we’re on a ‘cliff edge’, as an economy.
‘These findings highlight the cliff edge that the UK economy is on at the moment’, he says – and we do not need any (more) nasty surprises.
‘The recent interest rate rise was not unexpected but any sudden shocks from the Chancellor at the Autumn Budget could have a serious impact.’
We need to continue to proceed with caution.
‘Businesses to some extent know that uncertainty is to be expected due to Brexit’, says Michael Izza, ‘but they must again see good reason to invest in technology, training and development, as well as new products and services to help drive economic growth in 2018 and beyond.’
There’s quite a bit more detail on the new BCM findings – see the full press release here.