Economy still scares Lincolnshire businesses

One in five Lincolnshire businesses still do not feel safe after the recession officially ended two years ago.

According to a major survey of companies in the Lincolnshire region, in May 2011 fewer than 20% of businesses surveyed believe the recession is over for them.

The impact of public spending cuts, the rising cost of energy and the continued scarcity of credit have all hampered business recovery during the past year.

Breakdown of figures

  • The proportion of businesses who think the worst is over has climbed slightly in the past year, from just 7% in July 2010 to 14% in May 2011;
  • The effect of price rises on general energy use was reported as having impact on 77% of businesses;
  • Almost two-thirds said the severe winter weather had affected the day-to-day operation of their business, and 42% said it had resulted in a fall in trade;
  • Oil prices were shown to have the greatest impact on transport and logistics, with 89% of businesses reporting major impact or some impact on their business;
  • The proportion of businesses that feel that finance has become easier to obtain has fallen from 10% in July last year to just 3% in May 2011.

Shaken confidence

Signs of optimism evident in late 2010 and early 2011 appear to be faltering. The proportion of businesses that feel that trading conditions are improving had grown from 24% in July 2010 to 39% in March 2011. However, this fell back to 27% in the latest survey.

The number of businesses that say they are expanding the activities in their business, and that their business is attracting new customers, has fallen over the year by nearly 20%.

Liz Price, Senior Research Fellow in the Lincoln Business School at the University of Lincoln, said: “The results highlight the fragility of business confidence during the recovery.

“The key issues facing businesses over the last year have included access to finance, public sector cuts and late customer payments.

“A number of events beyond the recession – such as adverse weather conditions and rising oil prices – have also affected business performance. These in turn have affected businesses’ perceptions of the economic recovery and their overall level of confidence.

“The UK economy has now been in recovery for almost two years, and the findings reinforce the slow and prolonged nature of a return to strong GDP growth.”