Region’s business confidence ‘at highest ever level’

Businesses in the East Midlands are more confident of their future prospects than at any time since chartered accountancy body ICAEW started its monitoring in 2004, its latest survey has shown.

ICAEW’s Business Confidence Monitor (BCM) for Q3 2021 found that East Midlands businesses were among the most optimistic in the UK, with confidence at its highest level since the survey began in 2004.

Domestic sales are forecast to grow at a faster pace than in any other region over the next 12 months, as pent-up demand is released, with exports predicted to grow at the second highest rate of all regions.

This contrasts with the first months of the pandemic when businesses in the East Midlands suffered significant declines in sales.

As a result of this anticipated increase in sales, businesses plan to start hiring again, following cuts to staff levels over the last year. Companies projected an increase of 2% in their employment levels, as a result of which average total salaries are expected to increase by 2.1%.

Recruiting and retaining employees with non-management skills was reported as a growing challenge for 23% of businesses, higher than the UK average.

The survey indicated that the region’s businesses still continue to operate in a challenging environment. The proportion of businesses who reported regulatory requirements as an increasing source of difficulty has trended upwards over recent quarters, and now stands at 42%. This rise was likely due to production lines being affected by Covid-19 protocols and post-Brexit customs regulations.

Transport problems still posed a growing challenge for just over a quarter of East Midlands businesses, with many unable to find extra transport capacity as demand picks up in the economy.

Input prices are forecast to rise by 2.1% in the year ahead, and businesses said they plan a 1.4% increase in selling prices.

Justin Kyriakou, ICAEW Midlands regional director, said: “Following declines in sales at the beginning of the pandemic, it’s promising news that businesses in the East Midlands forecast sharp increases and are confident about their future prospects. However, they have told us they continue to face challenges on a number of fronts, including a lack of transport capacity.

“It is vital that, given the economic recovery in the East Midlands and concerns that the global health situation could deteriorate in the autumn, businesses are not hit with additional costs as support schemes, such as furlough, are wound down.”