Based on the responses of over 6,000 businesses, the BCC (British Chambers of Commerce) Quarterly Economic Survey suggests that UK economic conditions remain sluggish, despite a modest improvement in activity in the second quarter of 2018.

In the dominant service sector, ‘consumer facing’ industries, such as hospitality and retail, continue to report tougher trading conditions.

Cash-flow and investment intentions are falling significantly for retailers in particular as consumer spending — a key driver of UK growth — remains subdued.

In the manufacturing sector, the balance of firms reporting improved domestic sales rose in the quarter, and the balance of firms reporting improved orders increased to the highest level since Q1 2015.

However, the size of the sector means that its contribution to UK growth remains limited.

The balance of manufacturers reporting improved export sales and orders eased in the second quarter, suggesting that slowing global economic growth is forcing firms to look domestically for sales.

The survey also says that “a number of the key forward-looking indicators, if sustained, point to a subdued outlook”. The number of businesses reporting that they intend to invest fell in the quarter, and business confidence for both sectors also fell.

"The biggest concern for businesses continues to be “the difficulties they face when trying to access skills, with the percentage of firms reporting problems rising again”.

The report says: “All this shows that the economy is in a holding pattern, with annual economic growth this year set to be the lowest since the financial crisis.

"Much more needs to be done to put the UK economy on a surer footing. The BCC calls for a push to fix the fundamentals for business — fixing the crisis-hit training system, improving connectivity, delivering infrastructure improvements, and incentivising investment”.

BCC director general Adam Marshall (www.britishchambers.org.uk) said: “The availability of skilled staff remains the biggest issue that firms face.

"Unless Government gets a handle on the disarray in the training and apprenticeship system and sets out a clear immigration policy that enables firms to cover vacancies, the economic potential of many areas across the UK will continue to be held back.

"Big bold action is needed for the UK to buck the current slow-growth trend — with major new incentives for business investment, confidence-boosting infrastructure projects, and a concerted effort to slash the up-front cost of doing
business.”