Brexit mini-boom boosts economy index

The Brexit mini-boom enjoyed by business has boosted the East Midlands Chamber State of the Economy Index to its highest level in nearly two years.

For Quarter 1 of 2017 the measure of business confidence and success stood at 375, only eight points below its Q2 2015 level and nearly 100 points higher than just before the EU Referendum last June.

The Index is based on the net results of responses given by business to repeat questions in the Chamber’s Quarterly Economic Surveys, the latest of which (Q1 2017) was carried out between 20 February and 10 March.

The survey recorded a rise in the number of firms reporting increased sales in the UK (up from 27 net variance to 29) and overseas (up from 14 to 23 net).

Confidence levels were also higher with an increase in the number of firms expecting improved performance in the next three months in the UK (up from 23 to 27 net) and overseas (up from 18 to 26 net).

And the number of East Midlands firms expecting turnover (up from 51 to 67 net) and profitability (up from 30 to 49 net) to increase this year was also higher in the first three months of 2017 than in the final quarter of 2016.

The net variance of firms reporting intentions to invest in equipment rose from 10 to 15, and those with intentions to invest in training went up from 18 to 29.

There was also a boost in employment with the net number of firms reporting increased staffing levels up from 19 to 23 and the variance of those expecting to take on more personnel rising from 20 to 38 net.

However, finding suitably skilled staff remained the single second-biggest issue for responding firms. The most serious longer-term concern according to the Q1 2017 QES was inflation, which leap-frogged the Q4 2016 QES top concerns of business rates and exchange rates.

Chis Hobson, the Chamber’s Director of Policy, said:-

“What these figures confirm yet again is that the East Midlands economy has remained robust and far from falling into the mire of doom and despair predicted by many in response to Brexit has enjoyed nine months of mini-boom.

“We know there are inflationary pressures that can potentially hinder growth, especially coupled with the raft of new upfront costs for businesses introduced this month. Firms are already beginning to do report squeezed margins, but despite that we can see that, on the whole, business remains confident and plans to invest in equipment and training.

“Business in the East Midlands had all but conquered the initial fears over Brexit and coped with the fall in the value of Sterling, however, the recently called General Election on 8 June has the potential to create more short-term uncertainty.

“What is really important now is that all Parties clearly articulate what they stand for. There are a multitude of domestic issues that need to be managed and we would call on all candidates to make clear to business what their plans are for strengthening the economy now, during Brexit negotiations and post-Brexit.”