Lincolnshire

“The economy is still fragile”: Inflation a key concern for Lincolnshire firms

Lincolnshire businesses have welcomed latest results from the county’s Quarterly Economic Survey, which shows a steady increase in sales, though many have warned the economy is still “fragile”.

Results appear to show a calm and stable period following the impromptu general election back in May.

Sales and orders for the UK remain strong with a steady increase on last quarter’s results. Even more so when compared to quarter three in 2016 when results were significantly low. Since then performance has progressed which has been driven by both positive sales levels for services and improved performance from manufacturing.

Overseas sales also have improved with results, particularly for manufacturing which showed a 3% climb this quarter. However, further results for ‘services’ show a decline in performance, and orders has remained relatively unchanged.

On a positive note, cashflow has recovered well after declining results the last two quarters, with noticeable improvements across both services and manufacturing.

Inflation rises

Whilst business conditions have remained steady, inflation still remains a key concern for Lincolnshire businesses.

Last quarter, raw material was cited as the main reason businesses felt pressure to increase prices, but this quarter 50% of respondents reported ‘other overhead costs’ as the key reason.

43% of businesses in Lincolnshire reported ‘inflation’ as a concern with 38% expecting to increase prices of good over the next three months.

Overall, business confidence has returned after much uncertainty previously this year, and balances for both future profitability and turnover have seen big increases – which is the most likely rationale for a rise in confidence.

Paul Banton, Managing Director of Ruddocks from Lincoln commented on the latest results saying:

“Whilst business confidence may be rising, the economy is still very fragile.

“Concerns over rises in inflation are understandable however I believe for many businesses, locally and nationally, a more poignant issue is that around interest rate stability which directly impacts cash flow and business growth.

“Sensible governance, whilst we negotiate the uncertain roads of Brexit is crucial to ensure the economy remains buoyant, protecting and supporting fledgling businesses and encouraging the continued growth of well established businesses.”

Dr David Gray, Principal Lecturer at the University of Lincoln also commented on this quarter’s results saying:

“Although the figures point to a more positive outlook than the last quarter, they appear to reflect greater uncertain holding back investment.

“Sales growth particularly overseas should have performed better”.

Simon Beardsley, Chief Executive at Lincolnshire Chamber of Commerce added: “The QES continues to be an essential tool for local businesses, helping to paint a clear picture of the needs, gaps and trends within Lincolnshire and show how well the local economy is performing.

“The results this quarter are fairly stable despite some of the uncertainties we have been faced with over the course of the year so far.

“This shows resilience and strength, but it will also be interesting to see the results next quarter and see how they measure up.

“As always, we encourage Lincolnshire businesses to continue filling out the survey to ensure we receive the most accurate results possible.

“By doing so, we will see greater and better tailored support given to help bridge gaps where it is needed”.