Business Trend Summary YBG Press Release

Chamber of Commerce in conjunction with the Young Business Group [YBG] are pleased to issue the 2008 Business Trends Survey compiled through an open invitation to all Chamber members for their feedback on general business trading performance in 2007 relevant to the year ahead in 2008.

Key Findings
 Turnover and Profit in 2007 increased by more than +5% for over 50% of all respondents, while only 17% declined year on year.
 Staff numbers employed – almost half of the companies retained the same number of employees, with 45% increasing headcount and only 10% declining.
 Turnover and Profit for 2008 – 85% projected turnover growth the same or better with 76% projecting profit growth the same or better, and of those 15% anticipating turnover decreases a corresponding profit reduction was also anticipated.
 Staffing levels in 2008 – 54% remain at 2007 levels with 35% increasing employee numbers.
 Over 60% felt that their confidence for turnover and profitability compared to 2007 was the same or higher, a third being less confident.
 The three areas under States control which most significantly affects business confidence are:- taxation at 34%, housing at 17% and regulation at 14%, with planning restrictions being of concern for 8%.
 Not surprising the three areas not under Sates control most affecting business confidence are:- the global economy at 28%, UK Government at 16% and competition at 15%, with inflation coming in at 10%.
 A resounding 64% felt that the UK and Guernsey should not join the Euro.
 Only one third of respondents generate any on-line sales for their business with only 4% generating more than half their annual sales in this way and 54% generated at least some of their sales through their websites. The majority of these however capturing less than a quarter of total sales in this way.
 Capital expenditure plans for 2008 will largely be the same as in the previous year [50%] with 30% planning to increase investment and only 20% decreasing total spend levels. A similar profile applies to investment in technology and training investment but with almost half planning to increase expenditure in these two key areas.
 However 75% anticipate increased business costs with half forecasting increases of plus 5%. With 45% indicating price increases to their customers of 1-5% and 14% at 5% or more, only 5% will see any price decrease in their charges for 2008 – a very similar pattern to 2007 versus 2006.
 Salary and Wage costs –the expected trend for 2008 is similar to that observed in 2007. In 2007 69% experienced a total wage cost increase of 1-10% with, 40% expecting an increase in 2008 of 1-5% and 34% between 5-10%.
 A surprising 57% felt less confident for the Islands economic prospects over the next 12 months compared to last year, with 36% feeling as confident and only 7% more confident. Some of the main reasons quoted for this diminishment of general confidence were:- political instability, inexperience of new States members, tinkering of the agreed Zero-10 tax strategy and its impact on individual’s spending, the global credit crunch, tax impact on fuel prices and global competition.
 46% of respondents felt that housing and planning restrictions most impacted upon their commercial activities with regulation and taxation at 36%.

Topical Questions
1. Impact of Guernsey’s new fiscal and tax strategy on business – very mixed views with a third feeling it to be negative and 46% positive or neutral, with 17% unsure.
2. Is States’ spending target of below RPI a tight enough control – 74% felt not.
3. Airport and Harbour strategic assets – one third felt they should be self funding and two thirds felt they should be subsidised from the general reserve account.
4. Housing Licence application fees – only 9% felt they were set too high.
5. Population growth limitations – over half felt that this policy would limit business growth potential.
6. Change to the Machinery of Government in 2004 – respondents had a very mixed view to the success effect during the first four year term with roughly a third feeling ‘no effect’ and a further third a ‘negative effect’. Overall the majority felt that the changes had not had a detrimental effect. Over 75% felt that further reform of some sort was required post 2008 elections.
7. Business leaders standing for States election – unsurprisingly this business survey indicates that 87% felt more business experienced residents should stand to provide an appropriate balanced House.

Summary
Overall a pattern of cautious optimism emerges from the Business Trends Survey as a whole, tempered by some very real concerns from the business community regarding stability, prospects, Government policy, growth policy and costs generally.
Chamber of Commerce membership is very diverse by nature and so certain influences are more strongly relevant to some specific business sectors, however both population and planning policies would seem to be at the heart of many areas of concern that the business community have identified as key if economic success is to be nurtured through 2008 and beyond.



Paul Luxon
President – Chamber of Commerce
On behalf of Chamber and YBG