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Business confidence edges higher but investment remains a ‘concern’

The slight improvement in confidence came as firms reported an improving sales picture.
The slight improvement in confidence came as firms reported an improving sales picture.

Business confidence improved slightly during the second quarter of 2024, according to a new survey.

A total of 58 per cent of the firms that responded to the British Chamber of Commerce’s (BCC) quarterly economic survey expected to record a jump in turnover over the next year. That figure was up from 56 per cent in the first quarter.

Just under a third of firms expected no change over the coming year while only 13 per cent expected turnover to fall.

The slight improvement in confidence came as firms reported an improving sales picture. 38 per cent of firms said they had seen an increase in sales over the previous quarter, up from 36 per cent in the first quarter.

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“The latest results from our QES show that both business conditions and business confidence have improved, albeit from a relatively low base,” David Bharier, head of research at the BCC said.

The survey, conducted during May and June, suggested businesses have started to see some benefit from the improving economy.

The economy grew 0.7 per cent in the first quarter, outpacing every other G7 economy.

There was also positive news on inflation, with fewer firms expecting to raise their prices. 39 per cent of firms said they expected to increase prices in the next 12 months, down from 46 per cent in the first quarter.

Wage pressures remained the most commonly cited reason for raising prices. These pressures were particularly notable in hospitality and construction.

Despite the boost in business confidence, levels of investment remained disappointingly low. Just a quarter of firms reported an increase in investment for the second quarter, compared to 24 per cent in the first quarter.

Shevaun Haviland, director general of the BCC, noted that investment levels “remain an area of concern”.

Low private sector investment is a commonly cited reason for the UK’s sluggish productivity performance and Labour has promised to use “every available lever” to encourage businesses to invest.

“Our message to the new Government is clear. We need a long-term economic plan that has the green transition at its heart, with a workforce fit for the future, living in thriving local places and powered by businesses that are globally facing and digitally enabled,” Haviland said.