Businesses missing out on £7.2bn in untapped growth potential

Carl Williams

New research from business and financial adviser Grant Thornton UK has identified that North West businesses could be missing out on £7.2bn in untapped growth potential in 2018.

The region generated £165bn GVA (gross value added) in 2016, exceeded only by London and the South East. This made the North West the third highest contributor of the 12 UK regions.

Yet despite this, the research shows there is an estimated £7.2bn worth of economic output still to be realised.

The nationwide survey of 1,000 UK businesses with turnover between £10m to £1bn – including around 80 based in the North West, and supplemented with qualitative in-depth interviews with senior business leaders, identifies an array of barriers to growth for UK companies, which if tackled, could unlock an estimated £72.5bn in gross value add across the UK economy.

Comparatively, this equates to creating a new economy the size of Greater Manchester; or 1.4 million new jobs across the economy.

While UK business optimism has been on a downward trend leading up to and following the UK’s referendum on EU membership, the research suggests the majority of barriers to growth remain within businesses’ ability to influence. External forces feature lower on businesses’ list of top 20 concerns, such as that presented by Brexit (ranked 14th, at 22%) and regulation (ranked 16th at 20%).

The top barriers include: Technology (38%); brand, marketing and sales capability (34%); systems, processes and operating models (31%); talent, skills and innovation (31%) and partnerships (31%).

The report also explores the interplay between growth barriers and businesses’ stated abilities to overcome these via growth accelerators.

The analysis finds that businesses have scaled back their growth ambitions over the past year. While Brexit features as a barrier to growth, businesses seem more concerned with the lack of detail available to implement and execute their Brexit strategies.

As more finite details of the negotiation process emerge, we can expect confidence to steadily increase – irrespective of the outcome of these negotiations – and growth ambitions to subsequently recalibrate upwards.

Carl Williams, Grant Thornton managing partner in the North West, said: “In the North West, we’re lucky to be home to some truly exceptional and inspiring businesses, a number of which have contributed to this research. However, if we as a region are to unlock our economic potential, it’s clear that we must learn from these best-in-class companies by being brave and tenacious in seeking new opportunities to grow.

“These companies are ambitious, purpose-driven enterprises. They are embracing the power of technology, are alive to the possibilities of international trade and open to forging new, value-enhancing partnerships. They are thinking big in terms of external investment and M&A – and have clear strategies to reach the next level.”

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