Business confidence rising as firms plan to invest in 2021, says survey

Ed Dwan

2021 is the year to invest say medium sized businesses as the UK continues to follow the roadmap out of the coronavirus pandemic

According to the latest Rethinking the Economy survey from accountancy and business advisory firm BDO, at least 80 per cent of North West businesses plan to embark on a major investment and hiring drive this year and 40% of businesses plan to either expand by investing in new locations or acquiring other businesses.

The renewed drive follows the Government’s capital allowance announcement in last month’s Budget, with more than half of businesses (53 per cent) planning new investments as a result of the Chancellor’s ‘super deduction’ initiative.

Business confidence has also increased, as 93 per cent of businesses in the region expect revenues to return to pre-pandemic levels within a year of the strictest restrictions being lifted.

Mid-sized, PE owned and AIM listed businesses, what BDO calls the economic engine, account for less than 1 per cent of UK businesses overall, but contribute £1.4tn in revenues and provide one in four jobs.

In the five years leading up to the start of the pandemic, these businesses grew revenues by 46 per cent, despite Brexit-related uncertainty.

Ed Dwan, partner and head of BDO in the North West, said: “It’s clear that as Government restrictions start to loosen, and the UK’s COVID vaccine programme continues to help suppress the virus, North West businesses are gaining the confidence needed to make key strategic decisions in the months ahead.

“Mid-sized businesses will play an integral role in the UK’s overall economic recovery. Pre-pandemic, mid-tier businesses provided a significant proportion of jobs in the region and this looks set to grow over the next 12 months, with 47 per cent of businesses planning to hire more permanent staff.

“More than half (60 per cent) are looking towards a temporary workforce in order to provide the flexibility to balance both resource and market demand during the course of 2021.

“In light of the Government’s £3,000 incentive to hire apprentices, the majority (63 per cent) also said they would hire within the next six months, with a third specifically stating that this is because of the announcement.”