An economic survey of UK business reveals that while the economy has returned to growth, companies’ business confidence is suffering.

An economic survey of UK business reveals that while the economy has returned to growth, companies’ business confidence is suffering.

The British Chamber of Commerce’s (BCC) latest Quarterly Economic Survey (QES) shows that turnover and profitability confidence levels among manufacturers in the first quarter of 2011 have fallen to levels not seen since the second quarter of 2009.

The balance for turnover declined 20 points to +28 per cent when the percentage of companies reporting a decrease in confidence is subtracted from the percentage revealing increases, while confidence in profitability is down 20 points to +10 per cent.

Service sector companies are also less confident of increasing their profit in the next year, with the balance figure falling seven points to +10 per cent. However, confidence in future turnover grew five points to +31 per cent, the highest since the first quarter of last year.

The BCC observes that companies are still finding cash flow difficult to manage, with cash flow balances worsening markedly in the first quarter of 2011. For manufacturers, the cash flow balance plunged 18 points to -4 per cent, the worst since the first quarter of 2010.

The services sector cash flow balance fell by 10 points to -10 per cent in the first quarter of this year.

Commenting on the survey of over 5,000 businesses, BCC director general David Frost says, ‘The results of the QES show our economy faces a difficult year and that the recovery will be choppy.’

He urges the government to do more to encourage private sector growth.

See also: Darling’s PBR ‘bad news for small businesses’