7th March 2011, 1:47pm
Further dip in economy anticipated, research shows
business chart Businesses in Lincolnshire and Rutland are feeling less optimistic about the state of the local economy as public spending cuts begin to bite, according to the results of a survey.  

The Lincolnshire Economic Snapshot is a regular ‘temperature take’ of business attitudes in Lincolnshire and Rutland conducted by the Lincoln Business School at the University of Lincoln alongside the Lincolnshire and Rutland Employment and Skills Board.

The January survey shows a fall in optimism among local businesses. Just 14% of businesses feel the recession is over for them, compared with 18% in November. The number of businesses that have attracted new customers and are expanding their business activities has also declined.  

Professor Ted Fuller, Director of Research at the Lincoln Business School, said: “The results of the survey indicate that small businesses are anticipating a 'dip' in the economy, which is consistent with a predicated 'double dip' recession. Although some businesses are thriving because of strong competitive positions, most are surviving at best. A surprising and worrying number appear to be directly influenced by public expenditure to some extent.  There is no real sign that they anticipate any specific advantages of the changes in the provision of public services from the public to private sectors.”  

These findings reflect wider trends in the national economy. Recent figures reported by the Office of National Statistics show that national productivity (GDP) contracted by 0.5% in the fourth quarter of 2010. Businesses in Lincolnshire and Rutland were also affected by the adverse cold weather conditions in early December 2010. The majority, 66%, reported that the weather conditions affected the day-to-day operation of their business.  For 42% of businesses, this resulted in a fall in trade during this period.  

Access to finance continues to be problematic for most businesses.  Just 4% say that finance is becoming easier to obtain, compared with 8% in November.  More than half of businesses (59%) say that customers are taking longer to pay. Public sector spending cuts are a growing concern, with almost three quarters of businesses (71%) saying that the cuts are likely to affect their business. The rise in VAT from 17.5% to 20% is not, however, perceived as a major issue among respondents. Around 20% of businesses expect the VAT rise to have a negative effect on their business.

Some optimism is evident among local firms.  A growing number feel that trading conditions are improving, although these are still in a minority, at 31%.  The survey shows an increase in the number of businesses that plan to increase the hours worked by their employees, at 25% compared with 17% in the previous survey.  More than a quarter (27%) of businesses plan to recruit additional staff, and a growing number of businesses (17%) plan to offer apprenticeships.  
  
The survey highlights that around 70% of local firms identify skills gaps within their workforce. Key areas of skills concern are technical, practical or job-specific skills (35%), management skills (34%), and IT skills (28%).
The Lincolnshire Economic Snapshot survey is undertaken by Lincoln Business School at the University of Lincoln and the Lincolnshire and Rutland Employment and Skills Board.  The survey is repeated every two months to provide a regular “temperature-take” of the local economy, and an up-to-date picture of trading conditions for business.  

The next survey opens this month (March). If you would like to take part, please email Liz Price, Senior Research Fellow in the Lincoln Business School, at: economicsnapshot@lincoln.ac.uk.       
--Ends--