There are positives signs ahead in the results of the latest Quarterly Economic Survey (QES). Despite the first quarter still being a struggle for Lancashire’s firms, there are clear indications that many believe the business situation is set to improve.
Conditions remain poor
After a strong recovery in the second half of 2020, manufacturing sales have reduced in the UK and overseas. A return to lockdown measures are likely to be responsible for the UK downturn. Exports have been hit as a result of post-Brexit trade issues and over-stocking which took place at the end of 2020.
The service sector has shown improvement in UK sales but fewer firms have experienced growth than have seen a decline. Service exports have worsened with post-Brexit status of services still unresolved.
Contrary to expectations, both manufacturers and service businesses are experiencing increasing difficulties in recruiting staff.
Cashflow remains a problem for both sectors, especially service. Firms expect prices to go up, with pressure on raw materials for manufacturers a major concern.
Light at the end of the tunnel
While the current picture looks bleak there are clear signs that businesses expect things to improve.
Looking ahead at whether the next twelve months will be better than the last, most firms think it will. It was more clear for manufacturers , but both sectors believe that turnover and profitability will improve. Of course this comes after a terrible year for many businesses but it is the first time since the start of the pandemic that service firms expect things to get better.
“Lancashire firms have shown great resilience and innovation”
Geoff Mason, Policy Manager at the North & Wester Lancashire Chamber of Commerce said:
“With continued restrictions and weakened exports the first quarter has been tough for businesses in all sectors. Exporters have seen struggles with new trade procedures with the EU and reduced orders due to stockpiling before the end of 2020. There is hope that some of the issues will resolved and orders will return to normal over the next few months. However, for this to happen it is essential that the government listens to feedback from exporters to help them out. The Chamber continues to take the feedback from our members and make sure it is heard by policy-makers.
“Finally, after an precedented year, firms are starting to see a glimmer of hope. The roadmap out of lockdown has started to take affect. Many hope that once the economy re-opens it is for good. To ensure this outcome, it is essential the vaccination programme continues apace and that re-opening is accompanied by increased workplace testing. The government has already listened to our calls for an extension in workplace testing; this needs to be followed through until the situation is over.”
Babs Murphy, Chief Executive at the North & Wester Lancashire Chamber of Commerce said:
“The situation in Lancashire is similar to that seen across the North West and the rest of the UK. Firms are still finding conditions tough but see signs of recovery. However, Lancashire is in a good position compared to other areas. Both the North West region and UK are showing worse figures for current trading and less confidence in the recovery. This puts the county’s businesses in an excellent position to bounce back quickly and well.
“Throughout the pandemic Lancashire firms have shown great resilience and innovation. These attributes will be an advantage during the recovery and rebuilding of the economy. New challenges await such as the move to net zero; innovation and flexibility will be essential for businesses to make a success of these changes.”