East Midlands businesses confident after ‘dismal’ year
Businesses in the East Midlands are confident for their prospects over the next 12 months after a “dismal” year, a new report from chartered accountancy body ICAEW has found.
The Business Confidence Monitor (BCM) for Q2 2021 found that most businesses were optimistic about trading conditions for the next year, with sentiment likely to have been lifted by the vaccine rollout and the prospect of a strong economic recovery.
But companies in the region had faced a dismal 12 months, the BCM said, with some of the biggest contractions in domestic sales and exports faced anywhere in the UK. As a result, the East Midlands was joint-highest in the proportion of businesses operating below capacity.
Profits declined by 5.7%, both the sharpest fall in the UK and the biggest drop suffered by the East Midlands on record. Employment declined at a faster rate than in any other region, although the fall would probably have been more severe if not for the furlough scheme.
The proportion of firms citing transport problems as a growing challenge soared from 3% a year ago to 31% in the year to Q2 2021 as a result of pandemic containment measures and shortages of freight capacity.
More than half of companies said customer demand was a rising challenge, and more than a quarter identified problems with late payments. An increasing proportion of businesses also saw regulatory requirements as a growing challenge, likely related to COVID restrictions and post-Brexit trading frictions.
Nevertheless, companies are optimistic about the next year and expect the easing of lockdown measures to lead to a rebound in domestic sales and exports growth. Profits are expected to grow by 9.4%.
Dr Sophie Dale-Black, ICAEW regional director for the East Midlands, said: “The pandemic brought a dismal year for businesses in the East Midlands and our companies are still struggling with customer demand, regulatory requirements, and transport issues in particular.
“The success of the vaccine rollout bodes well for economic recovery and the optimism which our survey has identified suggests our businesses are confident and expect domestic sales, exports and profits to grow.”
