Latest chamber quarterly report reflects tough conditions but gives cause for hope

The latest Quarterly Business Report from the West Cheshire & North Wales Chamber of Commerce has found that business conditions remained historically poor in quarter one of 2021, as the third national lockdown severely limited activity.

However, the survey of 103 firms, who employ almost 9,000 people across the region, revealed that business confidence has been boosted in the first three months of 2021, amidst the strong vaccine roll-out and the Government’s roadmap providing some ability for companies to forward plan.

The report, published in partnership with Cheshire West & Chester Council, indicates that the re-introduction of national lockdowns at the start of the year continued to weigh heavy on key drivers of growth, but there is also cautious optimism from some firms going forward.

The latest report showed:

• Business confidence in the region has continued to strengthen, returning to similar pre-pandemic levels
• Both domestic and export sales and orders rose, but remain substantially below levels seen a year ago
• Firms’ investment intentions have recovered slightly, but many firms remain focused on preserving cash levels, and
• Employment expectations in the next three months showed a strong recovery returning to pre-pandemic levels

The survey fieldwork took place between February 15, and March 8. During this time the vaccine roll-out had starting gaining momentum and the roadmap for recovery gave firms more clarity of the months ahead.

The findings come as the Chamber of Commerce calls for a coherent strategy for growth which empowers businesses to lead the economic recovery from COVID-19.

Debbie Bryce, chamber chief executive, said: “Our latest report indicates some positive signs for WCNW businesses as the UK slowly starts to relax lockdown restrictions. Both confidence and employment expectations have returned to, or near to, pre-pandemic levels.

“However, investment intentions and sales and orders, although starting to recover, remain below levels in Q1’20.”

She added: “Our findings demonstrate that businesses are becoming more optimistic, though much remains to be done to ensure that optimism is borne out into prosperity, and many businesses still face a fight for survival in the coming months.

“The damage wrought to trading conditions by repeated lockdowns and issues at the border with the EU will not be repaired by renewed confidence alone. The Government must recognise the compounded impact that the combination of the pandemic and Brexit-related issues have had on firms up and down the country.

“Now is not the time for complacency, there must be a coherent strategy for growth which empowers businesses to lead the economic recovery from COVID-19.”

Gemma Davies, director of economy and housing at Cheshire West & Chester Council, said “The council welcomes the quarterly survey as it provides an invaluable insight into the current issues affecting businesses and will help to inform our future recovery plans in supporting the local economy as lockdown eases.”

The Chamber Quarterly Business Report for quarter one of 2020 is based on a survey that received 103 responses from businesses in West Cheshire & North Wales, representing 8,800 employees.

Meanwhile, the latest research by the Blackpool-based Federation of Small Businesses (FSB) says confidence among SMEs in the North West is among the highest in the UK, bouncing back this quarter from a record low as the economy begins to reopen.

With some trading restrictions now eased, the FSB’s quarterly Small Business Index (SBI) monitor shows the confidence measure for the region rising to +39 in Q1 of 2021. In Q4 2020 the reading stood at -57%, showing a remarkable turnaround in business sentiment as lockdown eased.

The region’s confidence figure is matched by the South West and West Midlands, and only surpassed by the East Midlands. It also stands higher than the UK SBI measure of +27.3.

North West small firms’ investment intentions were the highest of all the UK regions, at 27% – a figure that moved into positive territory for the first time since Q2 2020. The average UK figure was 18%.

The survey also shows 66% of small businesses in the region expect their performance to improve this quarter, compared with fewer than one in three (28%) that expect theirs will worsen.

More than half (52%) of those surveyed for the SBI in the North West expect their revenue to increase over the coming three months, with just under a quarter (23%) expecting sales to fall.

Paul Wareham

FSB England policy unit representative for the North West, Paul Wareham, said: “It’s fantastic that our retailers, our hairdressers and other businesses like gyms are now up and running for what is actually the first time this year.

“Our members, by and large, have welcomed the Government’s roadmap for easing lockdown restrictions, and we’re all hoping the virus doesn’t create any unexpected deviations from the current course – that would be a disaster. But it’s clear from our NW SBI report that if everything goes to plan businesses, on the whole, are optimistic about the trading prospects for the remainder of the year.”

However, he added that it is concerning that, while the number of North West businesses losing staff has improved since Q4 2020, overall net employment is still negative (-10%).