Birmingham Chamber of Commerce and Industry has painted one of the grimmest pictures of the local economy ever in its latest quarterly survey, with business in almost every sector struggling.
But the chamber said there were still some small signs for optimism in the worst financial conditions for decades.
The first quarterly economic survey of 2009 carried out by the Birmingham and Solihull Chamber of Commerce and Industry showed a downturn in every sector of the Birmingham economy, mirroring the national picture predicted by the British Chambers of Commerce.
Chamber president Bridget Blow said there had been a steady decline in the regional economy over the past 12 months, largely attributable to the decline in the area’s manufacturing businesses. She said: “There appears to be nowhere to turn in order to maintain businesses turnover and profitability. In many areas there has been a standstill but that is based on poor figures for the last quarter of 2008.”
Cashflow has been a major issue for firms as lenders have become reluctant to loosen the purse strings. Many said credit conditions were a major issue. The chamber is urging the Chancellor to consider a tax holiday for firms to ease pressure of meeting payments.
But, while things were looking difficult for almost every sector, the chamber said there were a few small reasons for optimism. The manufacturing and service sectors were split down the middle on what would happen to their turnover in the future. While 36 per cent said they felt it would worsen, 36 per cent thought it would get better – emphasising the uncertainty still prevalent within the domestic economy, the chamber said.
Ms Blow praised the “fighting spirit” of businesses in the region, adding: “In the face of the worst economic conditions for years, there is still a glimmer of hope. While we have people running our businesses with that sort of determination and spirit we can feel confident that we will come through this crisis.”
Manufacturers were worst hit with a huge drop in sales and orders at home. Sixty-three per cent said sales had declined since the New Year while 67 per cent recorded a fall in the same period.
Most manufacturing firms reported bad news on the jobs front. More than 20 per cent said they were attempting to recruit – but all the vacancies were at professional or managerial levels.
None were in the market for many of the any other job types. Not one company of those surveyed said they were attempting to recruit skilled or technical staff, clerical, unskilled or semi-skilled and skilled administrative personnel.
Companies were reluctant to take on graduates. Ms Blow said: “This is clearly a huge setback for the retention and recruitment of skilled labour. It will take years for companies to recover from the loss of skilled labour and graduate recruits.”
Investment intentions remained weak, primarily because of the depressed outlook for demand and high uncertainty over future prospects. This meant a marked upturn of companies reluctant to invest in training. Only 15 per cent had revised their plans upwards in the past three months while the majority said their plans were unchanged with 17 per cent revising downwards.
Few companies had invested in their own businesses.
Only eight per cent had increased their investment in plant, machinery and equipment with 73 per cent remaining static and 19 per cent revising downwards, highlighting the lack of cashflow, the chamber said.
The Birmingham and Solihull service sector was slightly better, with a decline in home sales and orders and a large fall in overseas work.
The vast majority of firms had not revised their investment plans in equipment or training. But the labour market for services firms was more worrying – 31 per cent were attempting to recruit in every sector apart from unskilled and semi-skilled workers and graduates.
Ms Blow said: “This again reflects a dangerous trend. Service sector companies are obviously nervous about investing in new labour and the long-term impact could be damaging.
“But at least there does appear to be some hope for those seeking work in this sector.”