Economic recovery strengthening across Lincolnshire, survey finds

Trading conditions for Lincolnshire businesses have improved for the third quarter in a row according to the latest results from the county’s latest Quarterly Economic Survey (QES).

The survey, which is run by the Lincolnshire Chamber of Commerce, shows that economic recovery is strengthening across Lincolnshire for businesses working in the manufacturing and service sector.

The survey shows that 40% of Lincolnshire businesses says that their UK sales have improved, which is the highest figure recorded since the survey started in 2009.

Some 37% of businesses said overseas sales have improved, up 3% from May and growing, while 26% say profitability has increased, an improving trend.

Cash flow remains an issue for county businesses, as 24% say it has improved but the figure remains higher than previous months.

Factors of concern for businesses also noted in the survey were business rates (24%), inflation (22%), legislation (31%) and red tape (37%).

The survey was conducted in August 2013. The data is compared against the results of previous QES, which are done every three months.

This year, just under 250 businesses filled out the in-depth survey.

Positive outlook

Simon Beardsley, Chief Executive at the Lincolnshire Chamber of Commerce, said: “It’s encouraging to see both UK and overseas sales improving in the third quarter of this year.

“Over 40% of businesses told us that their domestic market sales have improved, which is the highest figure recorded since the QES survey started in 2009.

“Looking at the figures for workforce, 66% of businesses tell us that it has stayed the same, whilst 20% say that it has increased. The number of businesses that are looking to spend money on training has also risen by 2%.

“The price of goods is also looking healthy, with 37% of businesses saying that they expect the price of their goods to increase, this is up 7% from last quarter.

“All of these results point towards a local economy that is slowly getting stronger and more confident, but we must not forget how fragile trading conditions are.

“And there is no room for complacency. Through the Lincolnshire Chamber’s network we must continually strive to do all that we can to support business and enterprise.”

Barriers to growth

John Longworth, Director General of the British Chamber of Commerce was in Lincoln on October 4 for the branch annual general meeting.

Speaking to The Lincolnite, John Longworth said: “Businesses have been very resilient and managed to survive the recession.

“There were a lot of business I’ve come across that had to go on short working and the directors had to take pay cuts, and they’re now getting to a point where they’re actually able to recover, and they’ve fought very hard to find orders and to export.

“We’ve had a major shift in our network. Two years ago only 22% of businesses were exporting, while now 39% are exporting, and also a shift away from the EU toward the rest of the world.

“One of the main drivers for export has been the domestic market going flat, and firms have sought alternative sources of revenue. Also, many businesses now operate online and they’ve become accidental exporters, as they receive orders online from overseas.

“Businesses are now ready to start growing again, but the biggest problem many of them have is they don’t have the cash and access to finance for their growth.

“The lack of access to finance is a big problem, and this is why the Chamber of Commerce network has been pressing very hard for a proper business bank to be set up, in the same way the Americans, the Canadians, the Germans, French, Italian, and South Koreans have.

“We see it [the business bank] as the key solution to this particular problem, which is a long-term structural failure for the UK economy. On the business side, we would like to see it underwritten by the Bank of England and independent of government.

“We’ve been pressing for business rates to be tackled for some time. It’s iniquitous that you should have a freeze on council tax, but then have business rates constantly rising, because businesses simply become a milking cow for the local authorities.

“I think Corporation Tax is a perverse tax, because it has all sorts of things wrong with it. Corporation Tax is levied on companies who are successful, and not levied on companies that are not successful, because if you don’t make profits, you don’t get Corporation Tax. The tax is levied on domestic based companies, but not on foreign companies, so that’s wrong as well.

“My view is that we should phase out Corporation Tax. It’s only a small percentage of the tax take, around 8% of total UK tax revenue, and it would put the UK in a superior position. If the Chancellor gave guidance that we are aiming to phase Corporation Tax completely, that would be a really enterprise-friendly environment.”