Quarterly economic report shows businesses still struggling when trading with EU

The Herefordshire & Worcestershire Chamber of Commerce has released the results of the latest Quarterly Economic Survey, outlining business performance between Monday 17 May to Monday 7 June.

For this quarter, the economic report includes a focus on international trade and details how businesses have been struggling to cope with requirements when buying and selling to the EU.

Key Findings:

  • UK sales have increased significantly this quarter from 29% last quarter to 48% in Q2
  • 78% reported requirement for custom declarations as a challenge when importing goods from the EU 
  • Number of businesses concerned with inflation increased to 38%
  • 64% of businesses reported rise of raw materials is leading to price increases
  • 51% of businesses attempted to recruit during Q2

A significant increase in UK sales is due to a range of factors such as the easing of lockdown restrictions which has meant sectors of the UK economy have seen a sharp bounce back in demand for products and services. Orders within the UK market have also improved from 26% (Q1 2021) to 48% (Q2 2021) which suggests businesses are seeing a growth in orders from firms and customers which is helping to stimulate the economic recovery.

The overseas market has seen an increase in sales from the previous quarter. 37% of businesses experienced an increase this quarter compared to 17% in Q1 2021. The 20% improvement in sales in the overseas market is due to a range of factors such as countries now exiting national lockdowns, which has seen a boost globally. Furthermore, free trade agreements with non-European countries will further support the UK position as a global trading hub which will likely see greater imports and exports to non-European countries. Orders within the overseas market have more than doubled from 15% (Q1 2021) to 38% (Q2 2021). UK businesses have seen a sharp growth in orders from businesses from outside the European Bloc which has seen the UK economy grow significantly over recent times.

Government economic support and increase in trade are two factors as to why cash flow for businesses across Herefordshire and Worcestershire has increased significantly over the past three months. However, more than 40% of businesses advised cash flow had remained the same and 21% reported a decline in cash flow. Government economic support packages such as the Job Retention Scheme and grants to support business costs helped firms with cash flow, however many firms were unable to qualify for support which saw an increase in businesses using their own cash flow to help the maintain costs of their business.

Sharon Smith, Chief Executive of Herefordshire & Worcestershire Chamber of Commerce, said: “After a difficult start to the year for many businesses, the increase in orders, sales and confidence reflect a more stable quarter 2 for firms who are beginning to bounce back and regain vital confidence.

“There is still a long road ahead for many with government support beginning to wind down along with the worry for many businesses of having to find cash reserves they simply do not have. However, the report demonstrates the resilience and determination of Herefordshire and Worcestershire businesses and just how much the increase in the vaccination rollout and lessening of restrictions have impacted business profitability and confidence.”

The latest data from the Quarterly Economic Survey shows firms are reporting a positive quarter this year following endless lockdowns and limited economic activity, however Members remain cautious about the challenges ahead and therefore are hoping they can remain open for the months ahead, to help recover from the Covid-19 pandemic.

To download the most up to date snapshot of the local business economy for free please visit www.hwchamber.co.uk/wp-content/uploads/2021/07/QES_Q2-2021-spreads-1.pdf.