Regional businesses ‘feel the economy is in recession’

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DESPITE the rate of local economic growth remaining in positive territory, a majority of businesses in Chesterfield feel the economy is in recession, according to the results of the region’s biggest independent business survey.

Derbyshire and Nottinghamshire Chamber of Commerce’s latest Quarterly Economic Survey for the second quarter of 2012 found that business performance dipped significantly between March and June.

The Chamber’s State of the Economy Index, which tracks a number of key economic indicators, dipped by 42 points in the second quarter as firms were hit by dampened domestic demand and challenges posed by the ongoing eurozone debt crisis.

Crucially, when asked if it feels like the economy is in recession, 52per cent of Chesterfield firms answered yes, whilst 42per cent answered no. By comparison, 48per cent of Derbyshire firms felt the economy was currently in recession.

UK sales for the second quarter remained flat in Derbyshire, with export sales down slightly, particularly among service sector businesses.

Looking ahead, UK orders and advance bookings for the third quarter are up, but export orders are down and firms are reporting decreasing confidence in both future turnover and profitability and revising down their plans to invest in training and plant or machinery.

There is, however, better news on the employment front, with a quarter of firms increasing the size of their workforce in the second quarter and almost a third planning to recruit in the third quarter – the highest level since March 2008.

Commenting on the results of the survey, DNCC Chief Executive George Cowcher said: “Despite growth slowing in the domestic market and export markets, local firms are creating more jobs than in previous quarters.

“Small and medium sized engineering companies supplying global manufacturing companies in the region are driving the growth in employment.

“Domestic demand overall is still sluggish with a majority of businesses feeling that the UK economy is in recession. Some businesses are being affected by problems in the eurozone whilst others are benefiting from changes in exchange rates.

“Whilst Government moves to bring down the deficit, cut back unnecessary regulation, reform employment law and use central Government procurement more strategically to support businesses of all sizes who are starting to yield results, they are still seen as tactical measures rather than part of an overall strategy for business growth.

“The Government has made major policy announcements, but has been very slow in implementing real change – for example, the slow roll-out of the Regional Growth Fund designed to stimulate business growth.

“The long-term deal that the private sector wants to strike with the Government is, in reality, simple. In exchange for facing up to increased variability and risk in the global economy, business leaders want stability, clarity and positive, pro-business policies in return.

“Ministers need to realise that the Government is still a major purchaser, a maker of markets and the guardian of Britain’s infrastructure and skills policies and unless it acts boldly to discharge those responsibilities rather than tinkering around at the margins, UK business won’t be able to deliver to its full potential.”