EU referendum blighting business confidence in the West Midlands
BUSINESS confidence in the West Midlands has sharply declined and is now much lower than the level recorded 12 months ago, latest research has claimed.
According to the latest ICAEW/Grant Thornton Business Confidence Monitor (BCM) companies in the region are expecting to limit investment, reflecting uncertainty created by issues such as the EU referendum and the broader economic conditions.
The Q2 2016 key findings were:
• A business confidence index score of +4.4 was recorded in the West Midlands this quarter, a sharp drop from +23.8 recorded a 12 months ago
• Growth in turnover is strong, with companies reporting a 5.4% annual increase this quarter
• Businesses (40%) report marketplace competition and customer demand (36%) as a greater concern compared to a year ago
• Skills shortages are also more of an issue than this time last year – 29% of businesses are seeing the availability of non-management skills as a greater challenge than Q2 2015
• Capital investment is expected to increase by 1.9% in the year ahead
Tom Madden, ICAEW Regional Director for the West Midlands, said: “Despite encouraging sales growth in the West Midlands, companies in the region are beginning to show some caution.
“The restraints in business investment may be linked to a dip in optimism in the current quarter. Given that sales are expected to grow comfortably, at least as far as domestic markets are concerned, it is likely that wider uncertainties are impacting business sentiment in the region.
“Business confidence is fragile, and the uncertainty provoked by the impending EU Referendum and global economic conditions have had an impact on business sentiment in the West Midlands. The next quarter could be decisive in terms of a return to a trend for growth and the economy going forward.”
David Hillan, practice leader at Grant Thornton in Birmingham, added: “While many of our clients are continuing to grow at an impressive rate, the forthcoming EU referendum has undoubtedly had an impact on business sentiment.
“The one thing which the business world dislikes is uncertainty, and it is hoped whatever the result on June 23 this produces an outcome which gives business a greater level of certainty moving forward. With this in mind, I would expect business confidence to improve in Q3.”
