Economic growth across the UK fell in the last three months – but Greater Birmingham manufacturers remain upbeat over their future prospects for driving the Midlands Engine forwards. New national ONS figures show that GDP growth for the first quarter of 2016 slowed to 0.4 per cent from 0.6 per cent in the last quarter of 2015, with services, manufacturing, total production and construction all showing slight declines.
But manufacturing bosses in Birmingham said they expected both turnover and profitability to rise in the next 12 months. By contrast, confidence among service sector firms was down with investment also falling. The current bullish outlook from Birmingham manufacturers follows a sales boost for local firms in Greater Birmingham Chambers of Commerce’s first quarterly business report for 2016.
The recent Chambers survey showed that 46 per cent of manufacturers saw sales jump in the first quarter compared with 31 per cent in the last three months of 2015. Now 65 per cent of West Midlands manufacturing firms say they expect an increase in turnover and 56 per cent a jump in profitability.
Stephanie Wall (pictured), senior policy and patron advisor at the Chambers, said local manufacturers were still ‘buoyant’ over their futures. “The slowdown in GDP growth is not surprising, given the context of a slowing global economy and uncertainty around the EU Referendum. In spite of slowing growth, it is great to see that our manufacturers are still feeling buoyant, after a particularly gloomy Q4, and willing to increase their investment intentions. This is exactly what we need to see if we are to improve productivity in the Midlands and drive forwards the Midlands Engine.
“As the year progresses and the EU Referendum looms, we will continue to monitor this sentiment, which will be published in our Quarterly Business Reports.” David Kern, BCC Chief Economist, said: “The slowdown in GDP growth is unsurprising given that structural issues at home have now combined with global headwinds to become a major dampening factor, as highlighted by the slowdown in services from 0.8 per cent to 0.6 per cent. Our own Quarterly Economic Survey shows that the economy is softening, and this is further proof.
“Services remain the main driver of UK economic growth, but firms are becoming more cautious before making long-term investment decisions. “The Government must remain focused on the task of boosting economic growth. We need more infrastructure investment and support for our exporters to create wealth and drive the economy forward.”