Business confidence recovering, say accountants

CONFIDENCE in future growth prospects has begun to increase in the North West following a sharp decline in the early part of the year, according to the latest Business Confidence Monitor (BCM).

The monitor – a joint initiative between the Instute of Chartered Accountants for England & Wales (ICAEW) and Grant Thornton – rebounded to achieve a score of 11.2 during the second quarter, compared with just 4.4 at the start of the year and 18.9 in the third quarter of 2010.

The BCM comprises interviews with 100 business chiefs from around the region and the confidence score is achieved by totalling the number of bosses who feel confident about their prospects and subtracting the number who don’t. The survey also found that businesses are expecting growth rates to strengthen as 2011 continues.

The average number of people employed increased by 1.1% on last year but job losses remain a concern and average salaries increased by just 1.2%, which is way below the current inflation rate of 4.5%.

Melanie Christie, ICAEW North West regional director, said: “This quarter’s BCM shows that growth and certainty are returning to the North West economy. Businesses are more optimistic about the future and this is reflected in their forecasts for turnover and profit growth.

“That said, there are still likely to be many bumps on the road to recovery. Whilst the labour market shows signs of improvement job losses remain a threat in the region. What’s more, wage increases are still lagging behind the rate of inflation impacting on workers’ disposable income and threatening the speed of recovery in the North West.”

David Grundy, North West managing partner of Grant Thornton, said: “People have adjusted to the idea that the road ahead will be a little bumpy. It was a difficult winter for many businesses and we will continue to see a mix of good and bad news.

“We’d agree that the UK regions are moving at different paces relative to the health of the sectors that underpin them. The signals from manufacturing and engineering, two sectors important to North West growth, are gradually becoming more positive.

“Recent success stories emerging from the likes of Jaguar Land Rover and others are serving to spread confidence, not just in the sector, but in the region as a whole.”