Political inaction has damaging impact on business – Chamber

Political inaction has damaging impact on business – Chamber

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Business leaders said a new survey demonstrates how political inaction over Brexit has had a damaging impact on firms in Greater Birmingham.

And the government were further criticised for introducing plans for a tariff scheme in the event of a no-deal Brexit without any consultation with the business community.

This follows the results of a new survey which shows that confidence and home orders among manufacturers in Greater Birmingham have plummeted over the past six months plus a universal lack of preparedness for Brexit.

The first Quarterly Business Report of 2019 by Greater Birmingham Chambers of Commerce (GBCC) revealed that investment intentions among manufacturers had dipped alarmingly in line with domestic trade. However, the service sector held up better.

Businesses are to be praised, say the GBCC, for their resilience in the face of “chaos and turmoil” generated by politicians in Westminster over Brexit.

The report, sponsored by Birmingham City University, shows that domestic sales for manufacturers fell dramatically with only 39 per cent reporting increased sales, a drop of 10 per cent on the previous quarter. Advance orders fared worse with 29 per cent showing an increase against 41 per cent in Q4 last year.

This decline had a negative impact on confidence. Manufacturers expecting to improve turnover in the next 12 months fell from 71 per cent to 43 per cent while those confident that profitability would increase dropped from 56 per cent to 37 per cent.

Paul Faulkner (pictured), chief executive of the GBCC, said: “For the past two years, a sense of chaos and turmoil has defined political activity at Westminster. This has created the impression that very few politicians are capable of putting aside party allegiances and working together in the national interest to tackle the most crucial negotiation this country has witnessed in over a generation.

“In the meantime, our firms have quietly and confidently gone about their business with a calm reassurance borne out in the results we have seen in a number of these reports over the past 18 months. Nevertheless, as we approach the end of March, it is clear the spectre of Brexit is having a marked effect on business output.

“Our latest survey reveals a noticeable increase in the proportion of businesses reporting a fall in domestic and international sales, a drop in recruitment levels with cash flow projections and investment levels hovering dangerously close to negative territory.

“In particular, it was no surprise to see that over a quarter of firms cited Brexit-related uncertainty as the main pressure they are encountering as the country faces the prospect of sleep walking into a disorderly withdrawal from the EU.

“Politicians have been quick to roll out empty platitudes on protecting the needs of the business community but their actions suggest otherwise. The Government’s plans to introduce a tariff scheme in the result of a no-deal Brexit going ahead without any consultation of the business community is a case in point.

“We will be working with the British Chambers of Commerce to ensure the views of local firms are reflected and recognised throughout the duration of the negotiation process, however long and arduous that might continue to be.”

Julian Beer, deputy vice-chancellor of Birmingham City University, said: “The past quarter has seen some truly remarkable political scenes, with Brexit dominating the landscape.

“Two failed attempts at ratifying a withdrawal agreement to leave the EU have been followed by a last-minute political scramble. Whatever one’s views on the EU, uncertainty is always a challenge for businesses.

“As such, it’s unsurprising that Q1 of 2019 has seen a modest softening amongst surveyed businesses, particularly in the UK market. Indeed, it is testament to the resilience of businesses throughout Greater Birmingham that this hasn’t been more severe.”

Raj Kandola, senior policy and patron adviser at the GBCC, said a set of questions about Brexit revealed a concerning lack of preparation for Brexit.

He added: “Sixteen per cent of firms in both sectors combined felt ‘not at all prepared’, 44 per cent felt ‘somewhat prepared’ and, worryingly, 25 per cent ‘didn’t know’ how prepared their business was ahead of a potential no deal Brexit.

“Our advice for businesses remain simple – prepare for what you can control and the GBCC is running as number of free Brexit Clinics to support local firms through the process.”

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