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ICAEW Business Confidence Monitor (BCM): South East

Q3 2019: Slow sales growth hurting business confidence

Company confidence in the South East is negative. Slower exports growth and fairly muted domestic sales rises are probably hampering overall confidence. Sluggish sales may also explain why late payments are a growing concern for companies in the region. And in the year ahead, businesses expect growth in their investment spending to moderate.

Business Confidence in South East

The Business Confidence Index in the South East remains negative in Q3 2019, at -8.6. As in other regions of the UK, Brexit uncertainty is likely to be a key underlying factor impacting company sentiment. 

Domestic sales and exports

Company confidence may also be suffering from an easing of export growth. In the year to Q3 2019 businesses report a rise in exports of 2.3%, comparing unfavourably to 3.2% a year earlier. An expansion in domestic sales of 3.1% in Q3 2019 is also unspectacular and down on recent quarters. 

Selling and input prices, and profits

Nonetheless, profits are rising at the faster pace of 3.7% year-on-year, compared to 2.6% in the previous 12 months. This may be partially explained by an easing of input price inflation (1.8%), which has been exhibiting a slight downwards trend in recent quarters − although this is still above the selling price rises achieved by companies of 0.9%. 


The overall weakness in business confidence is impacting the investment rates of companies in the South East. Notably, Research & Development (R&D) budgets and capital investment spending are up by 1.8% and 1.6% in Q3 2019 year-on-year, compared to rates of 2.4% and 2.2% respectively, a year ago.  

Business challenges

In terms of challenges, regulatory requirements remain the most widespread issue, with 49% of companies citing these in Q3 2019. This is also significantly higher than the historical average for the region. Difficult market conditions are reflected in a fifth of businesses reporting late payments as a growing issue, compared to 16% a year ago.  

Prospects for the next 12 months

Companies are cautious, with further moderations in R&D budgets and capital investment growth expected in the next 12 months, to 0.7% and 1.3% respectively. South East businesses, however, foresee faster domestic sales (4.7%) and exports (3.9%) growth. Input price inflation is projected to rise at a similar rate to the last year (1.7%). The net effect of stable costs and faster sales growth is that profits are forecast to rise at the faster pace of 5.0% in the year to Q3 2020.