Businesses have responded with Greater Manchester Chamber of Commerce’s (GMCC) latest economic survey to share their optimism for the city-region’s economy.
The most recent Quarterly Economic Survey was the first to show the Greater Manchester Index, a measure of activity and business confidence in the city-region, in positive territory since April 2020 at the height of the first Covid-19 lockdown. The survey’s 300 respondents reported an increase in customer demand, with signs of recovery being seen across all three sector groups: services, manufacturing and construction.
GMCC suggested that the successful ongoing vaccination campaign and the Prime Minister’s recently published roadmap out of the lockdown, offering reopening dates for businesses some of which have been closed since March last year, have contributed to a cautious optimism for the future. However, respondents continued to report that activity was being hampered by increased paperwork associated with Britain’s exit from the European Union on 31st January, with 80% of those who did business internationally having difficulties with the new trading arrangements.
Subrahmaniam Krishnan-Harihara, Head of Research at Greater Manchester Chamber of Commerce, said:
It will be a relief to both Greater Manchester’s business community and political leadership that a sense of optimism is returning after the historic economic collapse in 2020. After a long period of Covid-19 related restrictions, Greater Manchester’s business community seems buoyed by the Prime Minister’s roadmap out of lockdown and the extension of Covid-19 support measures that the Chancellor announced in the Spring Budget. This, of course, does not mean that we are ‘out of the woods’ yet. The services sector, which includes the worst affected sectors of retail, hospitality and leisure is still suffering and recovery from COVID-19 is going to be slow and difficult.”
“The survey results also showed that cash flow positions are still negative for all three sector groups, which means that more businesses reported a reduction rather than an improvement. Capacity utilisation also remains low with only 28% of businesses reporting that they are operating near full capacity. Without a substantial improvement in customer demand, businesses will not be able to raise revenues, cash reserves and operational capacity. Nonetheless, business confidence has improved considerably since December 2020.”
Despite the economy overall appearing to move towards recovery, the survey found that there was some divergence in activity between sectors. While nearly half of construction sector respondents reported an uptick in sales, a third of manufacturers and 40% of service sector businesses reported sales had fallen in the past quarter. With services accounting for over 80% of the Greater Manchester economy, GMCC indicated that a further upturn would be necessary to ensure all businesses can feel positive for the future. Subrahmaniam Krishnan-Harihara added:
It is now incumbent upon the government to build on the current improvement and optimism by providing absolute clarity on its roadmap out of lockdown so that firms, especially those in the worst affected sectors, can buy in new stock or make plans for how they will operate. The roots of recovery that we are seeing now are too precious to be squandered away.”