Confusing economic signals are making
it difficult for business leaders to plan growth strategies with any
confidence, according to Cambridgeshire directors.
The latest Institute of Directors’
quarterly survey among Cambridgeshire business leaders reveals a
continuing deterioration in business optimism but only a slight
weakening in general company performance.
Stephanie Smye, chairman of the IoD’s
Eastern Branch, said: “Despite the slowdown in the world economy,
latest financial figures indicate that the performance of the UK
economy remains robust, apart from the manufacturing sector which is
“House prices are continuing to
rise, the retail sector has had its best Christmas since 1987 and both
interest rates and inflation are very low. The problem is that
business leaders do not know how the international situation may
change. Most analysts expect economic growth of only one per cent in
the USA and European Union this year and a decline of one per cent in
“However, a further global shock
similar to the September terrorist attacks or a deeper and more
prolonged downturn could change the whole picture. In the UK we still
do not know whether the consumer spending spree is using up money that
would have been spent on foreign holidays or whether it is an
after-shock reaction to the September terrorists attack.
“It all makes it very difficult to
plan business strategies, although most indicators suggest the UK’s
robust economic growth is expected to continue through to the autumn.”
The IoD’s survey calculates business
opinions by subtracting the number of respondents who give a negative
answer from those giving a positive answer to arrive at a percentage
Based on this, most companies in the
south region that includes Cambridge reported slightly better than
average economic indicators. A balance of 10 per cent were more
optimistic than they were three months previously while 75 per cent
reported that their company was performing well. However, minus 23 per
cent were operating at full capacity while eight per cent reported
above normal order books.
In the Midlands region, which includes
Peterborough, optimism and performance were both lower than the
national average at seven per cent and 64 per cent respectively. While
capacity utilisation at minus 11 per cent was not as bad as the minus
21 per cent nationally, order books at minus one per cent were
significantly lower than the national six per cent figure.
While a lower-than-average 26 per cent
of Midlands firms reported output growth in the three months under
review, a higher-than-average 39 per cent were expecting output to
grow in the next three months.