More than a quarter of Kent companies reported a decline in exports in the first three months of the year as potential fears over Brexit put the brakes on overseas spending.
A fifth of businesses in the county suffered a decline in UK sales, with many firms ringing alarm bells about weakening cashflow.
The findings are from the Quarterly Economic Survey conducted by Kent Invicta Chamber of Commerce, due to be published every three months in Kent Business.
It reveals that 35% of 147 members surveyed have seen their cashflow suffer in the first quarter of the year, compared with just 13% six months ago.
The percentage of companies seeing a decline in export orders increased for the fourth straight quarter, with 31% saying their overseas orderbook had deteriorated in the first three months of the year, up from 26% on the previous quarter.
“With sterling down 7% against the euro since the start of 2016, we’d normally expect export sales to strengthen,” said the Chamber report.
“Perhaps European customers, in particular, are inhibited from full commitment to our exporters by the upcoming Brexit referendum.”
Concerns over domestic sales also increased, with 21% saying orders in the UK had worsened, the fifth straight month where the negative proportion had increased.
UK sales have decreased for a fifth of companies, flat on the previous quarter after a four-month decline.
“The steadily-growing proportion of firms that report decreased sales suggests a gradually increasing polarisation between thrivers and strugglers,” said the report.
“As always, some of the strugglers may be at risk of going out of business.”
The first quarter saw a drastic increase in companies saying their cashflow had worsened
Export orders have been worsening since the second quarter of last year
The number of companies reporting improved export sales shrank
Since the third quarter of 2014, there has been a steady growth in the percentage of firms expecting turnover to decline over the next 12 months, reaching 15% in the latest survey.
However, the number of firms expecting turnover to increase is much greater at 63% and also increased from 57% the previous quarter.
Nearly one in five companies expect their profits to decline over the next year, although more than half expect profits to grow.
The research shows 35% expect to increase prices in the next three months.
David Boughton, sales director at Scarbutts Printers, based in West Malling, said: “Sales are down. We made a bit of money last year, which is good for printing, but this year has not got going yet.
“March and April are usually our busiest months but we are probably 15% down compared to last year.
“People are frightened to invest or commit. I don’t know if that is to do with Brexit but the reluctance is to do with something.
“Everyone is hanging on. The first quarter has been really poor. People aren’t spending what they did last year.”
Confidence in export sales has suffered a drastic decline since the second quarter of last year, when only 10% said it had decreased and 68% said it remained constant.
In the first three months of the year, 26% said exports had declined, although it was a slight improvement from 27% three months earlier.
However, the research showed barely one-third of respondents are doing any export at all, compared with 95% prior to the 2014 disruption from Ukraine, Grexit, China’s slowdown “and increasingly, perhaps, Isis”.
The report said: “Clearly Kent has a long way to go in rebalancing to more export-led growth.
“It’s good to see a halt to the weakening of export sales reported in Q3 and Q4 last year.
“Even so, it isn’t promising to see the Q1 figures, which show 26% decreased exports against 21% with increased exports, especially as 31% reported lower forward orders for exports.”
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