11 minute read
Economy
Region’s businesses
can set a national example
The new chief executive of the Coventry and Warwickshire Chamber of Commerce says the region’s businesses can set a national example ensuring all communities share in the success of the economy.
Corin Crane has joined the Coventry and Warwickshire Chamber of Commerce after leading the Black Country Chamber for almost six years.
He succeeds Louise Bennett OBE DL, who has run the organisation for 20 years and will remain with the Chamber for a brief period to handover to Corin.
Crane said he was joining a very strong Chamber at a time when Coventry and Warwickshire had much to look forward to – despite difficult economic times.
He said: “I'm incredibly honoured to be given this opportunity to lead the Coventry and Warwickshire Chamber and will make sure that the brilliant work that Louise and the Chamber board have done over the last 20 years becomes the springboard for success in the future.
“I have a long history of supporting Midlands businesses and they are facing some difficult times in the coming months as we negotiate spiralling inflation, huge hikes in energy and fuel costs, hard to fill vacancies, increased pay demands and supply chain issues.
“But alongside the support many will need to survive and grow - I will be focused on celebrating the incredible stories of our local entrepreneurs and businesses that Coventry and Warwickshire is famous for, and making sure that every possible opportunity is seized.”
“Business confidence is high after the success of the brilliant City of Culture and we will want to ensure those arts and culture businesses keep on growing.
“We will have the eyes of the world on our tourism offer as the Commonwealth Games is launched and huge opportunities will become available as we become global leaders in sustainability on the back of our Very Light Rail programme, Gigafactory proposal and ground-breaking research taking place within our innovative businesses and universities.
“Most importantly, we want the businesses of Coventry and Warwickshire to become exemplars in the way we do business by putting ethics and strong, diverse leadership at the heart of everything we do.
“We want an environment where everyone shares in the success of our economy - inclusive, dynamic and innovative businesses creating exciting and achievable jobs for our local residents. Successful businesses will be the bridge between the rural and urban areas that define the Chamber’s membership.
“There are tough times ahead, but exciting times as well.”
Tom Mongan, president of the Coventry and Warwickshire Chamber of Commerce, said: “We are delighted to have Corin on board as our new chief executive.
“Louise Bennett has done such an amazing job over the past 20 years and we are very pleased that she will remain with us for a few months to assist with the handover to Corin.
“We are in a very uncertain period economically but, at the same time, have much to be excited about in Coventry and Warwickshire.
“Myself, the board and the whole team at the Chamber are here to support Corin in ensuring we support those firms hardest hit by economic issues but also in making sure that we grasp every opportunity we can to grow individual businesses and the wider economy.”
sure that every possible opportunity is seized.❜❜ Rise in interest rates is further risk to confidence
Business leaders in Coventry and Warwickshire say the biggest rise in interest rates for 27 years is a further risk to confidence.
The Bank of England has increased interest rates by 0.5 per cent to 1.75 per cent in a bid to bring inflation under control.
Corin Crane, the Chief Executive of the Coventry and Warwickshire Chamber of Commerce, said the decision was understandable in light of ongoing issues but, taken on its own, would not provide a remedy.
He said: “We all understand the position the Bank of England is in. It has a duty to try to control inflation and the lever it has always used to do that is base interest rates.
“The rise is, therefore, one we expected and one that was widely forecast.
“However, high inflation isn’t being caused by overconfidence among domestic consumers that needs to be dampened – there are many other factors at play both at home and abroad.
“The decision to increase rates will not cure spiralling inflation on its own and may only damage confidence at a time when there is already huge uncertainty among businesses and the wider economy.”
David Bharier, Head of Research at the British Chambers of Commerce, said: “This rise is the clearest signal yet of the Bank of England's intention to get inflation under control. Spiralling prices are cited by businesses as by far and away the top concern right now.
“However, given the extremely precarious state of the economy, this decision is not without risk for businesses and consumers that are exposed to banking or overdraft facilities.
“There are many causes of the current inflation crisis - global supply chain problems, trade barriers, soaring energy costs, increased taxes, and labour market shortages. Interest rate rises alone will do little to address these.
“Worryingly, our research indicates strongly that most small businesses are not investing for growth, and that longer-term confidence is beginning to wane.”
Second quarter dip in economic outlook
Manufacturing in Coventry and Warwickshire saw an unexpected boost in the second quarter of 2022 – but the overall economic outlook for the region took another dip.
They were the findings of the Coventry and Warwickshire Chamber of Commerce’s latest Quarterly Economic Survey (QES) which measures how firms across the patch are performing and how they feel about the months ahead.
The survey showed a drop in the economic outlook to its lowest level since the second quarter of 2021 but it remains on a par with the rest of the UK economy.
It did, however, see a rise in confidence among manufacturers as both overseas and domestic orders were reported to have increased.
The survey, which is delivered in partnership with Prime Accountants Group, is analysed by the Economy & Skills Group at Warwickshire County Council. Its analysis uses a similar score to the national Markits Purchasing Managers Index (PMI) where 50 is a neutral score and anything above means the majority feel positive and anything below means the reverse.
As well as being a barometer for the local economy, the results are fed into the British Chambers of Commerce’s national QES.
The service sector saw a drop in domestic orders, down from 62.1 to 52.4, as factors such as rising inflation began to take their toll. In manufacturing the score jumped from 47.6 to 53.9.
Overseas sales in the service sector dropped from 47.2 to 43.7, while manufacturing rose to 50.0 from 45.0.
There were positive scores on employment and investment in manufacturing while employment prospects fell in the service sector but investment plans remained unchanged on the previous quarter.
It meant that business confidence in the service sector across Coventry and Warwickshire fell from 83.7 to 63.5 and in manufacturing it rose from 46.1 to 55.1.
Sean Rose, head of policy at the Coventry and Warwickshire Chamber of Commerce, said: “In broad terms, the economy of Coventry and Warwickshire is holding up well in the face of many issues that are putting a drag on growth.
“Despite a drop in the economic outlook based on the responses to this survey, it is still in positive territory which means the regional economy is on course to continue to grow.
“It is pleasing that manufacturers appear to have seen a bit of a bounce in the second quarter of the year through increased domestic and overseas sales.
“The service sector did see a dip in fortunes compared to three months ago and there are a host of factors that will have played a part in that as businesses have had to face rising inflation, recruitment problems and a general increase in the cost of doing business.”
Steve Harcourt, director of Prime Accountants Group, said: “As we entered Q2, it was clear we were heading into a turbulent time for the local and national economy, which would impact all businesses and consumers.
“With a large part of the local economy involved in supply chain, businesses would be affected by events happening around the world as has been the case for the last two years.
“With no prospect of economic stability in the near future the local economic confidence has been dented in line with the rest of the UK regions.
“As expected, the scores from this quarter have seen a drop across the board in the service sector, as a result of the cost of living crisis and consumers tightening their purse strings.
“It’s promising to see that the outlook within the manufacturing sector has improved despite the challenges businesses are facing across the region. Overall the results still show the local economy as having a positive outlook with the overall economic outlook index being at 54.9%.
“With all the challenges that we can see ahead, it is important as a region we continue to push through the second half of the year and do what we can to support one another in business.”
Sunny Parekh, of Warwickshire County Council, said: “Coventry and Warwickshire’s overall economic outlook index continued to indicate a robust local economic landscape, despite the overall index score experiencing a reduction in Quarter Two.
“The second quarter of the year presented businesses in Coventry and Warwickshire with a turbulent operating environment as the economic fallout of the war in Ukraine created considerable economic shocks, particularly impacting energy, commodity and food prices. Inflation reached unprecedented heights in Q2, as businesses and consumers alike had to navigate the impact of price pressure on their business operation and household budgets respectively.
“The latest QES shows a varied local picture, any pent-up demand that was experienced by local services in Q1 was mitigated in the second quarter as the outlook index reduced significantly, likely due to the tightening of household budgets impacting consumer demand levels. Meanwhile, the local manufacturing sector surprisingly bucked the national trend with positive movements in its overall economic outlook, somewhat offsetting the decline seen in the service sector results.
“Despite such deviations, both sectors continue to show a positive economic outlook in the face of economic adversity, but the question is for how long?
“Looking forward to the second half of the year paints a difficult picture for local businesses. The economic headwinds facing the economy show little signs of decelerating as inflation is forecasted to continue to rise as wage growth slows further impacting demand levels both nationally and locally.”
Summary of 2022 Q2 Key Numbers:
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Employment
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Chamber
reacts to GDP fall
Business leaders in Coventry and Warwickshire have reacted to a fall in economic output in the second quarter of the year.
GDP – the measure of economic activity – fell by 0.1 per cent between April and June after growing in the first quarter of the year.
Corin Crane, chief executive of the Coventry and Warwickshire Chamber of Commerce, said it reflected the concerns of members.
He said: “When we speak to businesses across the region we are hearing the same issues time and time again.
“Costs are going up, supply chains are disrupted and recruiting people is not easy. It’s all making it difficult for firms to implement their growth plans and that is why investment is falling.
“The drop in GDP will come as no real surprise because it reflects the message we are getting from businesses.
“As I’ve said before, there is so much going for Coventry and Warwickshire and we have lots of exciting opportunities ahead of us but there is no question that urgent action is needed to help reduce costs and bolster confidence.”
David Bharier, Head of Research at the British Chambers of Commerce, said: “Today's 0.1 per cent fall in GDP data is yet another signal that the UK economy is moving in an alarming direction.
“While some consumer-facing industries have benefited from further withdrawals of Covid restrictions on travel, the retail sector saw a one per cent decline in the quarter, reflecting the unprecedented pressures from inflation and global supply chain disruption.
“The 0.2 per cent fall in real household consumption reflects continued weakness in consumer confidence and a mounting cost of living crisis.
“Business investment remains a serious challenge. While investment in construction has increased, other forms of investment, including for machinery and equipment, continue to fall.
“Since 2021, our research has been flagging the damaging impact of inflation, it is wiping out many firms' profit margins and threatening their long-term growth.
“Supply constraints caused by global Covid lockdowns and conflict in Ukraine, coupled with soaring energy costs, have created a perfect storm that many small businesses are struggling to weather.
“Worryingly, our research is also pointing to decreasing business confidence as fewer firms expect to see any turnover growth in the next 12 months.
“That’s why it is becoming critical for the Government to take action as soon as possible. They must immediately cut the VAT on businesses’ fuel bills to five per cent. The longer the economy is left to drift towards the danger zone the harder it will be to rectify.”
