The Bank of England regularly publishes a summary of reports compiled by their twelve regional Agents following discussions with at least 700 businesses across the UK every reporting period.


This is a summary of economic reports compiled by the Agents during October and November 2019. It generally compares activity and prices over the past three months with a year ago. The information in this publication includes a summary of information gathered by the Bank’s Decision Maker Panel survey and a survey on companies’ preparations for EU withdrawal.

Key points

  • Uncertainty continued to weigh on activity and sentiment
  • Slower growth meant that businesses had a little more spare capacity than usual
  • Employment intentions softened and pay growth stabilised

Consumer demand

Growth in consumption was muted, particularly in services. Sales of big-ticket household goods and new cars remained weak.

Annual growth in retail sales values remained subdued over the past three months. Brexit uncertainty and the ongoing shift towards online retailing continued to weigh on store-based retailers.

Contacts said that the announcement of a General Election had led to a postponement of some purchases of big-ticket items such as new cars and household goods, even though it had been widely anticipated. However, spending on those items tended to be low in the final quarter of the year, so the impact on annual sales was expected to be limited.

While there was likely to be a little disruption to Christmas spending more generally on and around the election date, the overall impact on sales in December was expected to be small.

Sales of used cars were solid, supported in part by the ongoing expansion of personal contract purchase agreements in the sector. However, sales of new cars remained weak.

In consumer services, contacts said that the weaker economic outlook weighed on spending at restaurants, especially in the mid-range price bracket. Growth in holiday bookings and other discretionary spending was also weaker. However, spending on health and experiences was robust.

Business and financial services

Growth in business services weakened. Uncertainty about Brexit and the General Election weighed on activity.

The Agents’ score for business services turnover fell to its lowest in three years. Law firms reported some delays to mergers and acquisitions and commercial property deals.

Demand for public relations and marketing services fell, as companies cut discretionary spending. Spending on corporate Christmas events was also lower.

Recruitment consultants said that employers were slower to make hiring decisions.

In contrast, demand for advice on Brexit increased, for example on how to prepare for customs and regulatory changes. Litigation and insolvency work also picked up.


Investment intentions remained depressed by slower global growth and political uncertainty.

Investment intentions were soft among larger firms and exporters. Contacts said that more projects were finishing than starting. And investment in the retail sector remained low due to weak sales.

However, companies continued to invest in maintenance and to replace equipment. Contacts also continued to invest in IT or automation to improve efficiency.

Contacts in manufacturing and construction thought that they would benefit from an increase in investment when uncertainty started to lift. However, there were risks around how soon that would materialise.

Corporate financing conditions

Demand for credit remained weak. Credit availability continued to be tight in some sectors.

Demand for credit remained subdued, given weak investment.

Banks’ appetite to lend to the retail, casual dining, construction and property sectors remained low.

Banks tightened lending criteria modestly for other sectors. Small and medium-sized companies reported more caution from peer-to-peer lenders. Asset-based finance was also slightly more expensive.

Larger, less risky companies continued to report that banks were keen to lend, and that non-bank finance was plentiful and cheap.

Trade credit insurers reported rising demand for cover and modest increases in claims. They were declining cover for more businesses, typically in retail and construction. Bad debts remained low in these sectors, but had risen slightly in recent months.

Property markets

There was strong demand for industrial property, but the housing market continued to be weak.

Commercial property

Occupier demand for industrial space was robust, and there were shortages in some areas.

Demand was particularly strong for logistics space near key transport routes. Contacts said that industrial rents were steady or rising.

Demand for office space was strong in larger cities but weaker elsewhere. Demand for retail space continued to decline and rents to fall.

Investment activity remained subdued among overseas investors, due to political and economic uncertainty.

Private UK investors were more active, however, finding yields still attractive relative to other asset classes.

Contacts said that investors preferred industrial over retail premises. As a result, industrial property values continued to rise, while retail property values fell.

Employment and pay

Employment intentions remained slightly negative and recruitment difficulties eased a little.

Contacts’ employment intentions remained negative. A number of contacts said they were hoarding labour in the expectation of a recovery in demand in the near term. As a result, they expected their overall headcount to be unchanged.

Some consumer services businesses reported cutting headcount to lower costs and improve productivity. There was an increase in the number of firms reporting recruitment freezes. And some contacts said they were using less temporary labour.

Recruitment difficulties eased slightly, but remained elevated. Staff churn was lower due to uncertainty, and some contacts said that the prospect of a downturn had led some self-employed workers to seek permanent employment.

Contacts continued to report skills shortages in manufacturing, professional services and IT.

There was an ongoing shortage of workers to fill lower-skilled jobs in warehousing, social care, hospitality and manufacturing. This was due to the reduced availability of non-UK EU workers.

Recruitment difficulties continued to support demand for entry-level workers or apprentices to fulfil future skills needs.

Costs and prices

Input price inflation slowed, and consumer price inflation eased. Margins became more squeezed due to higher labour costs.

Companies’ input price inflation eased further. This reflected slower global growth and the recent appreciation of sterling, which had reduced price pressure from imported commodities and materials. Manufacturers’ domestic output price inflation also slowed somewhat.

Business services price inflation remained modest and was mostly driven by rising labour costs. Contacts said they were able to raise prices for audit, commercial and personal indemnity insurance, and letting agency fees for landlords. Some price increases were due to regulatory or legislative changes.

Inflationary pressure for consumer goods eased a little. However, consumer services inflation was broadly steady.

Intense competition, consumers’ price sensitivity and a slight easing in non-labour input price inflation limited increases in the price of goods. Utility and fuel price inflation also slowed.

There were mixed reports on promotional behaviour ahead of Black Friday and the run-up to Christmas, but overall the expectation was that it would be similar to last year.

Food price inflation remained modest, but with pockets of upward pressure, and clothing and homeware price inflation also remained subdued.

Price inflation for new cars and larger discretionary goods eased slightly. There was modest inflation in consumer services, private sector rents, insurance, some leisure activities and regulated transport.

Due to the weaker economy, many companies were unable to pass on higher costs in full to their selling prices, even after allowing for increases in efficiency. As a result, profit margins were squeezed further.

All sectors were affected, but margins were most squeezed in construction and consumer-facing sectors. For the latter, the pressure on margins was exacerbated by the shift towards online trading, higher business rates and the impact of increases in the National Living Wage on pay.

Some contacts felt that there was little scope to absorb further pressure on margins. If margins were squeezed more, they might have to raise prices or make radical cuts to costs.

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