EU referendum undermining business confidence

BUSINESS confidence in Yorkshire and Humber slumped last quarter and has not recovered since.

According to the latest ICAEW/Grant Thornton Business Confidence Monitor (BCM), the threat of steel plant closures across the region is likely to be contributing to uncertainties, while wider issues such as the upcoming EU Referendum and economic conditions continue to impact business sentiment in the region.

Q2 2016:

•         A business confidence index score of +5.5 was recorded this quarter, which is significantly lower than +22.9 recorded a year ago
•         Domestic sales continue to outstrip export sales increases (3.8% vs 2% this quarter)
•         Businesses report employment growth of 2.4% over the last 12 months and expect a 1.6% over the year to come
•         Capital investment increased by just 1.6% over the past 12 months, with Research and Development increasing annually by 2.2%

Chris Manners, Yorkshire and Humber ICAEW regional director, said: “Business confidence is fragile and the upcoming EU Referendum is likely to be undermining business confidence across Yorkshire and Humber. Furthermore, with the introduction of the Living Wage, the Apprenticeship Levy and continuing cuts and austerity it is not surprising that confidence continues to remain low in the region. The next quarter could certainly be decisive in terms of a return to a trend for growth and the economy moving forward.

“Problems with the steel industry are an additional factor contributing to negative business sentiment, particularly in South Yorkshire.  This is not just because of the wider supply chain within the regional economy, that any closures could have, but also the knock-on impacts of job losses on retailers and other local businesses. Over-supply in the steel industry is a deep-rooted global challenge, that is unlikely to disappear quickly.”

Mark Overfield, partner at Grant Thornton in Yorkshire, added: “Although the latest ICAEW/Grant Thornton Business Confidence Monitor reveals that business confidence remains fragile, we believe that there is much to be optimistic about in the region. Our research shows that the UK has an untapped business potential to the tune of £469bn. In Yorkshire and Humberside, that figure is £60bn.

“We work with businesses across all sectors and the majority of those businesses continue to see significant opportunity. Many are planning for future growth, reflecting positive regional trends in spite of the more negative headlines being generated through recent political and economic uncertainty, and it is pleasing to note that this region was one of only two regions to actually report an increase in confidence since the last quarter.”