The highest level of export orders for
three-and-a-half years has been recorded by British companies against a backdrop
of stalled business confidence and continuing under-performance in the
manufacturing industry, according to the latest survey conducted by the
Institute of Directors (IoD).
However, the Institute - which has 900
member in its Eastern Branch which covers Cambridgeshire - believes the loss of
confidence is due to seasonal factors and does not detract from a picture of
continuing economic growth.
The IoD believes the Bank of England will
need to raise interest rates at least once more to suppress the inflationary
impact of Chancellor Gordon Brown's injection of £43 billion into government
spending over the next three years.
The survey reveals mixed fortunes for
companies in the south region which includes Cambridge compared with the
Midlands region which includes Peterborough. Although a balance of 79 per cent
of firms in both regions believe they are performing well this actually
represents a fall from 89 per cent for the Peterborough region and from 86 per
cent for Cambridge compared with the last survey's findings in April.
The balance of companies that are more,
rather than less, optimistic about their prospects in the next three years fell
from 50 per cent three months ago to 44 per cent in Peterborough and from 61 per
cent to 52 per cent in Cambridge.
There was also a serious drop in the
balance of companies working at full capacity in the Peterborough region - down
from minus 18 per cent in April to minus 35 per cent this quarter. In contrast,
the Cambridge region experienced an improvement from minus nine per cent to
minus five per cent.
The Cambridge region also led the nation
for exports with 18 per cent reporting above average orders against seven per
cent with below average. In Peterborough and the rest of the Midlands region the
comparative figures were 16 per cent above average and 11 per cent below
The top two factors limiting company
output over the next three months continued to be a shortage of skilled staff
(identified by 43 per cent of directors) and a lack of orders (named by 38 per
Commenting on the figures, IoD Eastern
Branch chairman Stepahnie Smye said: "The modest weakening in overall
business performance can mainly be explained by seasonal factors while export
orders were at their firmest for three-and-a-half years.
"The Chancellor's Comprehensive
Spending Review will have an inflationary impact which could trigger the Bank of
England to raise interest rates at least once more. As a result, manufacturing
exporters will continue to take the brunt of problems caused by a strong pound
against the still weak Euro."