State of the Region: Businesses plan for growth despite tough climate
BUSINESS leaders in the West Midlands are set to embark on expansion plans in 2012 despite their confidence being shaken by economic conditions which they predict are set to get worse.
And despite fears of issues in the Eurozone continuing to affect performance, many businesses are looking to forge ahead and target new markets and clients as well as make acquisitions over the next 12 months.
These are some of the key findings in TheBusinessDesk.com’s State of the Region survey, which has been completed by hundreds of business leaders.
The survey, compiled with support from lead sponsor DLA Piper, and supported by PwC and the CBI, paints a comprehensive picture of business sentiment across TheBusinessDesk.com’s heartlands of the West Midlands, Yorkshire and the North West.
In the West Midlands, 59% of respondents expect their business’s turnover to grow over the next 12 months and almost half (47%) expect to maintain the number of staff employed. However, just 18% highlighted acquisitions as the most likely transactional activity in which they would be involved.
Despite many commentators anticipating that international markets offer the best opportunities for growth, 74% of respondents see regional and national markets as better suited to their needs.
Demand for goods and services is seen as the biggest challenge faced by businesses, but those surveyed said the impact of public spending cuts will be the biggest challenge for the West Midlands region going forward.
More than two-thirds (70%) said the introduction of enterprise zones is good for the overall growth of the region, while 42% said it is too early to tell if Local Enterprise Partnerships (LEPs) are having a positive impact.
More than half (52%) said they are less confident about the state of the UK economy than 12 months ago, 47% said they believe economic conditions will get worse.
Access to finance is the issue that needs to be addressed most urgently to drive further growth, although 60% of respondents expect bank lending for businesses to remain the same.
Mark Beardmore, Office Managing Partner, DLA Piper in Birmingham, left, said: “This time last year, general sentiment among businesses was one of cautious optimism, but the on-going economic strain appears to be taking its toll. There has been a worrying shift in opinion when compared to last year’s results; more than half of all respondents feel less confident about the UK economy this year, compared to 18% last year and the same number are expecting conditions to worsen in 2012, compared to only 23% last year.
“Whilst the Government’s planned credit easing scheme may help towards boosting confidence, it’s unlikely that the benefits filtering out from this will be felt until 2013. Further steps need to be implemented in the interim if the economy is to receive the lift it needs and it will be interesting to see how this process might unfold in 2012.
“With its strength in sectors such as manufacturing and professional services, the West Midlands certainly has the foundations from which to build growth and confidence, even in these troubled times. It’s encouraging to hear that almost two thirds of the region’s businesses are expecting turnover to grow over the next 12 months. This demonstrates the determination that continues to resonate throughout our business community and the appetite that exists to make the most of the opportunities that adversity can often bring.”
Mark Smith, regional chairman at PwC in the Midlands, left, said: “When it comes to forecasting revenue for the year ahead, there is a noticeable air of confidence in the poll findings and this is good to find at the heart of the region’s entrepreneurial business community.
It is particularly good to see that the overall improvement in business confidence is resulting in a significant number of businesses expecting to take on staff in the year ahead.
“Increasing turnover in a low growth economy is going to be challenging for private businesses and therefore we are likely to see more companies switching their export focus away from Western Europe and US to developing economies in countries like Brazil, India and China.”
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