The economy has slowed down both regionally and nationally according to the results of the latest Quarterly Economic Survey (QES) conducted by Greater Manchester Chamber of Commerce.
The Greater Manchester Index™, a composite indicator made up of key QES measures, has dropped from 30.6 last quarter to 18.3 this quarter. The figures contrast sharply with the previous survey which showed optimism returning as businesses looked forward to a new direction with the election of a new government. This time the survey was carried out in the uncertain period between Labour coming to power and the first Budget of the new Chancellor.
Subrahmaniam Krishnan-Harihara, Deputy Director of Research at Greater Manchester Chamber, said the survey results reflected a combination of the “doom and gloom” prevalent in government announcements and wider economic factors.
He added: “The uncertain economic climate and the messages that are coming from the government mean businesses are postponing investment and that is reflected in the results. Consumer confidence dropped in September after six months of improvement. That will have an impact on the economy due to the UK’s reliance on consumer spending.”
The QES results revealed a sharp downturn in both international trade and manufacturing since the last survey was conducted in the second quarter of this year.
“The stress part is international trade,” Subrahmaniam said. “The ability of businesses to export has declined. We know that some SMEs have stopped exporting altogether as they can’t deal with the post-Brexit paperwork. There has been a sharp reduction in international trade.”
Trade has also been affected by the fact that Germany, the UK’s second biggest trading partner after the USA, was the only Eurozone country not experiencing growth.
Subrahmaniam said manufacturing had been hit by a reduction in orders, high shipping costs and uncertainty about what the government intends to announce in October’s Budget.
The QES shows the downturn in manufacturing had a bigger impact in North Manchester as the sector made up a higher percentage of the local economy than in other areas, but South Manchester had also felt the effect due to the number of logistics businesses based there that were delivering fewer products.
“The difference in performance across the region reflects the make-up of these local areas,” Subrahmaniam said. “Investment must reflect this. That is why devolution is so important as you can fine tune that investment.
There were some positive figures in the QES with both services and construction seeing an improvement in domestic orders, a growth in service sector exports and a rise in retail sales.
Looking to the future, Subrahmaniam said a major barrier to economic growth was the UK’s lack of public and private investment compared with other countries.
“We need significant public investment to encourage private investment,” he explained. “We need to invest in long-term projects. Our competitors are going to grow because they are getting the investment. We need the equivalent of the post-war Marshall Plan in the UK, but I think what we will actually get is austerity by stealth.
The results of the Quarterly Economic Survey were revealed at the Chamber’s Economic Review held at Elliot House on 26th September. The QES is part of the UK’s largest business performance and sentiment survey. You can read the full QES report here.
Panel Discussion and Q&A
Following the QES presentation, Subrahmaniam took part in a panel discussion chaired by Chris Fletcher, Policy Director at Greater Manchester Chamber.
The other panellists were:
Neil Rampe, Intercity
Sharon Seville, F1rst Commercial Recruitment
Matthew Stuttard, JMG Insurance