State of the Region: Growth predicted despite spending cuts

THE majority of business leaders in the North West are expecting to see growth this year, despite fears over the impact of public sector cuts, and pressure from staff for pay rises.

This is according to TheBusinessDesk.com’s annual State of the Region Survey, in association with law firm DLA Piper.

Hundreds of readers completed the survey last month to provide a fascinating insight into the prospects and mind-set of the region’s business community.

While 66% of respondees expect to grow their business this year, 70% agreed that the North West is a good place to do business.

The coalition Government, which has set about an aggressive overhaul of the regional economic development structure since May, receives tentative support.

Just 40% see it having a positive inpact on the economy, a similar number judged that it is too early to tell, while the remaining 20% believe actions such as the dismantling of the North West Regional Development Agency and the proposed closure of Business Link North West.

Despite this degree of scepticism the spending cuts outlined by the Government in last year’s Emergency Budget were deemed “painful but necessary’  by a clear majority, 55%, of respondees.

More than 60% fear the spending cuts – which have hit the North particularly hard – will have a direct impact on their business.

The survey also suggests that having ditched the regional development agencies in favour of Local Enterprise Partnerships, and launched the Regional Growth Fund to help boost private sector growth, the Government has some work to do to get its message across.

Just 4% of respondents said they had a clear understanding of LEPs, while just over half, 51% had a “very limited” understanding.

Knowledge of new regional funding structures including the RGF was evenly split- just 7% said they were “very clear” on the new system whil 46% had some idea and 47% were “not at all clear”.

Looking at a national picture, 37% of those completing the survey were more confident on the state of the econony than they were 12 months ago, 45% said they felt the same and 18% were less confident.

Some 26% said they expect an economic upturn, but twice that figure, 52%, expect conditions to stay largely the same, while 22% fear a decline.

David Gray, office managing partner for DLA Piper in Manchester, said: “The results of the survey say a lot about the spirit and resilience of the North West’s business community.

“People accept that these are challenging times but 2011 is not a time for standing still. Businesses are adopting innovative approaches and have been forced to scrutinise their strategies, their strengths and weaknesses more than ever before. As a result many have developed a more robust and sustainable business model to take them forward in the future.”‬

Philip Rooney, office managing partner for DLA Piper in Liverpool added:: “2010 proved to be an interesting year, difficult for all but with a number of success stories.  It now looks as though the UK economy is becoming robust enough to avoid slipping back into recession.

“Although business leaders seem more upbeat about the future, 2011 is undoubtedly going to be a tough year; the rebalancing of the economy towards the private sector will produce many challenges and its impact will not be fully understood for some time.

“The North West’s businesses are both flexible and innovative; they have faced up to the recent difficult market conditions with a remarkable resilience. 

“However, the future of the region’s economy and prosperity for its communities will depend to a large extent on the success of the new local enterprise partnerships with support from the Regional Growth Fund in driving sustainable growth.”

A full copy of the North West State of the Region report will be available to download on TheBusinessDesk.com from tomorrow.