Weekly Blog by Philip King, CEO of the ICM - 'More mixed messages'

The British Chambers of Commerce (BCC) released its latest Quarterly Economic Survey this week and at best the messages were mixed.

Business confidence, for example, remains high, with most expecting an upturn in their fortunes - and turnover - in the coming year. The manufacturing sector, specifically, is looking stronger but the performance of the service sector has weakened and there are concerns about the sustainability of the recovery. There are concerns also about the problems in the Eurozone, and the potential impact on UK exporters.

My take on this is that there is little consensus on where the economy is, or where it's heading, and the prospects for the year ahead are almost impossible to predict. Nevertheless, every piece of good news serves to build positive expectations and that can only be a good thing.

The BCC survey, of course, only focuses on the private sector. So what about the public sector?

I had a really interesting hour on Monday discussing public sector issues with an ICM Member who holds a senior position in one of the Inner London Boroughs. He confirmed much of what I already knew in terms of pressure on costs, more effective use of resources, and the need to drive efficiency savings. But he also raised some issues that I'd not previously considered in so much detail.

How each local borough decides to cut costs over the next four years, for example, will vary significantly depending on the colour of the party calling the shots. Then there is the impact of specific plans, such as the proposed caps on housing benefit. Some tenants will face a shortfall between their rent and the capped benefit levels, which means they will have to move to a property or borough where rent costs are within - or closer to - the cap. As a result, Private landlords who provide social housing will lose tenants and there will be an increase in empty housing stock and pressure on buy-to-let mortgage repayments, particularly at the small scale landlord sector. If this isn't bad enough, the effect will be exacerbated by the changes to calculation of the Local Housing Allowance (used to determine housing benefit payments) which in the future will be calculated on the basis of cheaper rents.

The inter-relationships between public and private sector are deep and complex; perhaps that explains exactly why it's so difficult to predict the short - and longer - term future. We're going to need our wits about us as reality unfolds throughout coming months!