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UK growth was already "sub-par" before referendum

UK economic growth was "uninspiring" in the run-up to the EU referendum and many firms were in a "holding pattern", according to the latest British Chambers of Commerce Quarterly Economic Survey released this week.

The BCC poll is Britain's largest private sector business survey and is based on over 8,200 responses from firms in Q2 2016. These latest results provide a snapshot of how the UK economy was performing just before the EU referendum.

It shows that several key indicators were down or remained static. In particular, domestic and overseas sales in the services sector fell ahead of the referendum; manufacturing sales remained at what the BCC calls "an historically low ebb".

The key findings in the Q2 2016 survey are:

  • In manufacturing, the balance of firms reporting improved export sales rose to a percentage balance of +9 from +8; however, fewer firms reported an increase in advance orders (+5, down from +8 in Q1);
  • The balance of manufacturers reporting improved cashflow fell three points to +4, the lowest level since Q2 2013;
  • Fewer services companies reported an increase in export sales and orders (+11 and +13, down from +13 and +16 respectively);
  • The balance of manufacturing firms reporting an increase in orders fell four points to +9; in services this fell by one point to +20.
  • The balance of manufacturers confident that turnover would improve fell from +44 to +40 - the lowest level since Q3 2012;
  • The balance of service firms confident that turnover would improve remained unchanged at +44.

Dr Adam Marshall, BCC Acting Director General, said: 

"Even before the EU referendum, both business confidence and economic growth were softening in many parts of the UK. Our latest survey results, captured just before the vote, suggest that many businesses have been operating in something of a holding pattern for some time."

While it is too early to say what impact the referendum decision will have on most firms in the UK, said Marshall, "it is not too early for us to say what business wants to see: stability in markets, clarity in politics, and action on the issues that matter for growth."

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