UK and overseas orders were strong for Lincolnshire in the final quarter of 2016 and other areas remain steady amid the uncertainty of Brexit, according to the Lincolnshire Chamber of Commerce Quarterly Economic Survey (QES).
The survey by the British Chambers of Commerce on behalf of the Lincolnshire Chamber of Commerce, Lincolnshire County Council and in partnership with the University of Lincoln, indicates that in the fourth quarter of 2016 there was a spike in sales and orders, particularly in terms of exports.
Overseas sales and orders have seen an improvement with almost half of all exporting businesses seeing an increase in sales, and 39% seeing increases in orders.
Councillor Colin Davie, Executive Member for Economic Development at Lincolnshire County Council said: “Clearly, Lincolnshire businesses are beginning to reap the rewards of the current exchange rates.
“Although future trading relationships will undoubtedly be affected by the national Brexit negotiations, it’s still vital that Lincolnshire has its own voice and forges its own links with other nations. That way we can have more control over our economic future.”
Almost a third of businesses in Q3 reported tough conditions, but figures from quarter four have recovered, showing some signs of optimism going into the new year.
The result of Brexit has produced lots of uncertainty for local businesses, which in turn leaves many unanswered questions for those who rely on export, inward investment and overseas labour.
As such, expectations around inward investment haven’t had the same positive reception, which could be down to funding streams and investors feeling less confident while negotiations for leaving the EU are underway.
There was a minor change in capital investment intention of businesses, and more than 50% stated no change in their positions.
Cash flow for local businesses has slightly improved with figures showing 33% of businesses reported an improving position.
This is up 5% from last quarter, albeit results were also similar for the amount of businesses stating a worse position – which rose to 27% up from 23%. Overall, results remain positive yet steady.
Manufacturers expected to increase prices
From a national point of view, 75% of manufacturers in the East Midlands are expecting their prices to rise over the next three months.
Overall the number of businesses expecting to increase their prices over the next three months has risen from 30% to 38%.
The QES also shows the number of businesses who expect their prices to remain the same fell from 57% to 50%, providing a clear indication that inflationary pressures are on the horizon as no businesses stated having any kind of price drops.
Some 40% of businesses said their reasons for price inflation is a result of overhead costs, whilst 38% specified rising raw material costs.
Nearly one in three businesses cited an issue with the current level of the exchange rate, which may have the tendency to fluctuate as deals with the EU are negotiated.
It is therefore clear that this is one of the key challenges as we look ahead to 2017. As well as that, double the amount of businesses from last quarter reported ‘inflation’ as a major concern in 2017.
David Gray, Principal Lecturer at the University of Lincoln, said: “Since July’s fall in the pound against the dollar and the euro, exporters have been increasing the costs of imported raw materials.
“The intervention from the Bank of England should, as a result, favour cheaper borrowing and assist with cash flow, and symptoms of these outcomes are evident in the survey.
“Uncertainty about Sterling, the impact of costs and the lack of clarity over what Brexit means, are all factors affecting sentiment and deterring some investment.”