Suffolk firms' profits hit amid Brexit uncertainty
PUBLISHED: 01:00 02 April 2019
Suffolk firms’ finances are taking a battering over the Brexit debacle, latest figures show.
The bruising effects of the political uncertainty, and measures taken to shield themselves from the potential effects of the UK exiting the European Union without a deal, have seen cashflows and profitability plummet into negative territory, Suffolk Chamber of Commerce’s Quarterly Economic Survey (QES) shows.
Figures released on April 2, 2019, covering the first three months of the year, reveal a worrying decline in activity and confidence, with all categories measured in the survey showing falls from 2017 highs.
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However, the trend broadly follows the national pattern, and the Chamber stressed that the county ‘remains resilient’.
Manufacturers’ cashflow plummeted from a balance of +18% to -11%, while service companies saw a drop from +17% to -6%.
Meanwhile, profitability balances slipped from 0% to -6% for manufacturing companies and from -2% to -12% for their service counterparts.
Paul Simon, Suffolk Chamber’s head of communications and campaigns, said: “These figures suggest that the previous gentle decline in current and planned business activity and sentiment in Suffolk is accelerating and that must be a cause for worry.”
The declines could well be a reflection of the level of stockpiling to prepare for a possible chaotic ‘no-deal’ Brexit, he said.
“That said, given the context of Brexit and a general sense in which the government is failing to come to grips with the needs of business in terms of the fundamentals of the economy, the situation could have been a lot worse,” he said.
Matt Moss, managing director of Smart Garden Offices, based at Thurston, said his business, which imports Scandinavian timber as its main raw material, had been hedging against the effects of a ‘no-deal’ Brexit and potential price rises by stockpiling.
“We sit in a world of unknown,” he said. “We don’t know what’s going to happen with timber, particularly the price – I don’t think the supply will become an issue.”
Price uncertainty had never gone away since the referendum, he said. “We don’t know what the currency is going to do, and what’s going to go on in terms of import charges. People are starting to prepare for all eventualities and starting to get those increases in early.”
Holding stock meant ‘dead’ money, although from the point of view of his firm, which manufactures garden buildings to order, the effects aren’t “that hideous”, he said.
“We’ve actually hit our first quarter target in terms of sales. It’s been hard – we’ve had a lot of decisions being put off.”
Public sentiment was a major factor for the business, which sells directly to the general public, he said.
“We supply a luxury product so it’s not a necessity purchase. So we sit on the bubble – if there’s certainty in the market they’ll spend money.”
While enquiry levels were good, conversions to sales were not as easy as they had been, he admitted.
There was the wide spectrum of possible Brexit outcomes, making the situation very unpredictable, he said.
“I don’t know how anyone is going to prepare,” he said. “It’s massive frustration for everybody – including myself. Whether you are for Brexit or not, the decision was made and once a decision is made you have got to get on with it.
“It’s a hugely disappointing end result because we should have been better prepared and we should have been having these discussions a long. long time ago.”
He added: “I want certainty – no decision is the worst decision that could be made.”