What is in store for the UK economy?

The British Chamber of Commerce economic survey, the largest independent business survey in the UK, is seen as a leading indicator of Gross Domestic Product (GDP) growth. The latest survey results highlighted protracted weakness across most economical health indicators. With a slowdown in the service sector, the survey warns of the UK economy entering a period of stagnation.

The BCC revealed that service sector indicators have worsened and limped through the last quarter of 2019 - something that many organisations will have felt around the uncertainty of trading.

High-level findings in the Q4 2019 survey:

Results are generally presented as balance figures - the percentage of firms that reported an increase minus the percentage that reported a decrease. If the figure is a plus it indicates expansion of activity and if the figure is a minus it indicates contraction of activity. A figure above 0 indicates growth, while a figure below 0 indicates contraction.

For example, if 50% of firms reported their sales grew and 18% said they decreased the balance for the quarter is +32% (an expansion).

If 32% reported their sales grew and 33% said they fell the balance is -1% (a contraction).

Service Sector

• The balance of firms reporting increased domestic sales fell six points from +15 in Q3 2019 to +11. Those reporting increased domestic orders fell from +9 to +6. Both are at their lowest level since Q1 2019
• The balance of firms reporting improved export sales dropped from +6 to +5. Those reporting increased export orders fell from +1 to 0, the lowest level since Q1 2019
• The service sector, which accounts for almost 80% of UK economic output, saw all its key indicators worsen compared to Q3 2019.

Manufacturing Sector

• The balance of firms reporting increased domestic sales rose from 0 in Q3 2019, to +4
• While those reporting increased domestic orders rose from -7 to -1, it’s the first time since Q4 2011 that this indicator has been negative for two consecutive quarters.

While this paints a lacklustre picture, there is hope that the UK’s withdrawal from the EU will now provide answers to the concerns of businesses and the uncertainty about trading conditions.

From a recruitment and employment perspective, The UK employment rate was estimated at 76.2% (Dec 2019), reaching a new record high. In the Office of National Statistics labour market report, there were an estimated 794,000 vacancies for the UK during the period September to November 2019; 20,000 fewer than the previous quarter and 59,000 fewer than a year earlier. So, it looks as though any improvement in the economic outlook will bring further candidate scarcity challenges.

Ahead of 31 January and exiting the European Union there is a handy Business Brexit Checklist from the Chamber of Commerce that is worth checking out. It looks at workforce and cross border trade and provides an online Triage Tool that provides guidance relevant to business type.