The Birmingham Chamber survey also dispelled one myth that had previously been thought to be one of the few good things about the current financial conditions.
It said that contrary to expectations, the export market had been struggling. This was despite the huge drop in the value of the pound, that many thought would encourage investment and foreign purchases in the UK.
Exports had been regarded as a lifeline for recession-hit companies, particularly manufacturers of the type so common in the West Midlands.
But the chamber survey found exports had not maintained their position as expected, with 48 per cent of businesses saying both sales and orders had declined. This was the highest percentage recorded since the fourth quarter of 2001, and is due to the weakness in world demand outweighing any gains to competitiveness arising from sterling’s depreciation, the Chamber said.
A spokesman for the EEF said their own research tallied with this. Commenting on the EEF quarterly research, he said: “The decline in the total new orders balance was driven by a sharp decline in both domestic and export orders. Reflecting the significant downturn in the domestic economy, the balance of responses on domestic orders fell to -54 per cent, from -26 per cent in the fourth quarter of 2008, while the export orders balance declined to -43 per cent from 10 per cent
“Only 15 per cent of respondents reported an increase in export orders, suggesting the global slowdown may have prevented the weaker pound providing a significant boost to export orders.
“The downturn has now spread to all sectors and regions. Firms in the motor vehicles sector reported a sharp fall in both output and orders as balances hit -91 per cent and -89 per cent respectively. This has had knock-on effects on firms in the metals sectors, who supply car manufacturers, for example. After motor vehicles, the metals sectors reported the weakest output and orders balances.
“Although in normal circumstances sterling dropping would have helped, the problem is there’s just not the market out there. People are just not buying.
“The one small exception is where some foreign governments are introducing car scrapping schemes – that’s helped in that most of our car manufacturers export.
“Our business trend survey basically said there weren’t any good signs – at the moment we are expecting things to be as bad in the next three months as they have ever been.
“We are making a submission asking for a wage support scheme so that companies can keep their workforce and hold on to their skills. It’s also important they are able to access finance, so the Government needs to do something to get the banks lending again.”
