Bank of England hears of a “mixed bag” of indicators from across all sectors
Despite challenging times, there was no sense of doom from the meeting. It was clear that many businesses were taking a pragmatic view as some overheated markets corrected themselves.
Cornwall’s drive to improve standards and invest in new technologies had proved sensible. Across all sectors of business there were indications that businesses investing in quality or niche markets continued to show modest growth. However the majority of businesses in Cornwall were feeling squeezed by increased costs, with the credit crunch adding further woe in some sectors.
Ewan McClymont of Bishop Fleming accountants reflected a sense of a mixed picture for the Cornish Economy:
“there are signs of cautious optimism for sectors such as manufacturing exports and agriculture where there is a lot more activity. However increased costs of raw materials, fertiliser, fuel and feed continue to be a concern”.
In sectors linked to property development activity had shown a sharp downturn, due to a slowing market and a tightening in the availability of credit.
Kevin Butler of the Bank of England, who reports to the Monetary Policy Committee, reported that the UK economy overall reflected a similar picture in the first six months of 2008:
“Business services, not housing related, are doing well. Consumer figures are mixed, with some data showing modest growth. Overall growth is slowing markedly but not stopping. The growth projection for the year will be between 1% and 1.5% although it is possible that one or more quarters will show a small negative”. He suggested that the challenge for the MPC was to take action to dampen inflation without triggering a recession.
Phil Ugalde of Proper Cornish reported that the food industry was finding things
“a bit hairy, although underlying business is strong. The challenge comes from things beyond our direct control”.
He went on to explain the impact of increases in food and fuel prices “We are not downbeat” he explained “but we are watching developments elsewhere very closely”.
Richard Glover, Chief Executive of the Cornwall Chamber said that comments at the meeting followed the pattern of discussions with members across Cornwall. He urged the Bank of England and Government to think carefully before adding further worries to businesses
“Whilst most members are not in the depths of gloom yet, the struggle to operate a successful business is harder than it has been for some time”.
He echoed comments from the meeting that a reduction in fuel duty would ease the burden of increased costs and boost confidence generally. Whilst not part of the Bank of England remit, representatives agreed to reflect that feeling in the comments to Government Office.
Notes to Editor:
Representatives of the Bank of England meet quarterly with members of the Cornwall Chamber of Commerce. It is an opportunity for The Bank to report on conditions in the UK and seek feedback on business conditions in Cornwall. This is then incorporated into a report for the Monetary Policy Committee which meets monthly to set interest rates.
The Cornwall Chamber of Commerce and Industry was established in 1988 and is accredited by the British Chambers of Commerce. It is an independent, local organisation, whose main aim is to improve the prosperity and competitiveness of Cornish businesses,
For further details please contact Richard Glover on 01209 216006