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Sales rise but businesses are still low on confidence, says ICAEW study

Business confidence in the South East remains marginally in negative territory, despite showing improvement from mid-2016, according the the latest Business Confidence Monitor by the Institute of Chartered Accountants in England & Wales.

In the East of England, confidence has fallen to its lowest level in the East of England since Q2 2009.  Despite this negative reading, businesses in the region anticipate some improvement in the year ahead.

Domestic sales are up in both areas, matching decent export growth in the South East at around 3.5%.

Export sales growth for East of England companies is expected to accelerate from 1.7% growth over the last 12 months to 3.4% in the year ahead.

Domestic sales are also anticipated to be stronger, increasing to 4.3% growth compared to 3.8% in the year to date

Both regions are operating below capacity, with a figure of 42% of businesses in the South East and 57% in the East of England.

Input prices are forecast to increase by around 2.5% this year. Wage growth is predicted to slow to below 2%.

ICAEW South east regional director Andrea Dunhill said: “It is encouraging to see that business confidence in the South East has improved following a difficult 2016, despite remaining in negative territory.

"Inflation continues to rise and commodity prices are increasing more rapidly than before, so we expect input prices to climb faster still across the region.

“Businesses are likely to continue passing some of these increases on to their customers which means that 2017 is likely to be a year of counting the pounds and pennies for consumers.”

Her East of England counterpart Philippa Bourne said: “It is a concern that business confidence in the East of England has dipped again this quarter.

“On a more positive note, sales expectations remain robust, possibly due to the post-Brexit world proving better than some worst case scenarios predicted. There are new opportunities to export in the region as businesses can make the most of the fall in sterling.

Ms Dunhill added: “In order for businesses in the region to start building confidence, government should focus on negotiating the most inclusive Brexit deal for business of all shapes and sizes across the UK.”