State of the Region 2012: Businesses fear eurozone impact

MORE than 60% of North West business leaders believe ongoing issues in the eurozone will affect their organisations over the next 12 months.

TheBusinessDesk.com’s State of the Region survey 2012 also reveals that a clear majority of respondents are looking to regional and national markets to drive their businesses forward, rather than international ones.

The survey, completed by hundreds of business people, is supported by lead sponsor DLA Piper and PwC and the CBI and paints a comprehensive picture of business sentiment across TheBusinessDesk.com’s heartlands of the North West, Yorkshire and West Midlands.

For more, and to read and download a full, detailed report of the findings, click here

Coupled with looking to regional and national markets for growth, one of the reasons being uncertainty in the eurozone, 58% of respondents in this region said targeting new markets and clients was their key business goal.

More than half (59%) expect their business’ turnover to grow over the next 12 months – a similar picture to our 2010 survey – and 38% expect to grow staff numbers over the same period compared to just 15% who expect to cut staffing levels.

Half the respondents anticipate public sector spending cuts will have a direct impact on their business, although this figure was 16% down on last year’s survey

Almost two-thirds (63%) believe their organisations have adequate access to finance to cope with economic pressures.

Will the recent situation in the eurozone affect your business?

“The impact is indirect really – just a further blow to confidence, which means banks won’t lend and  corporates put off investment decisions.”

“We export into the eurozone, and the uncertainty is casuing havoc with the Euro and the dollar.”

“The eurozone is the biggest export market for the NW. Instability will stifle export-led growth.”

“We have a number of Europe-wide clients who are most concerned about the future of the Euro and in turn are hesitating before investing in new products as confidence is low.”

“It affects us in terms of the ability of our clients to grow and more alarmingly it is preventing businesses who would usually take risks to shy away for them.  There’s a lot of uncertainty at the moment and it is worrying for some of my clients.”
 

Peter Brook, intellectual property partner at DLA Piper said: “The chief economist for the Bank of England recently stated that the eurozone crisis is ‘the single biggest threat to UK recovery’.

“It seems that business leaders agree on the severity of the threat. Nearly two thirds of respondents believe that the eurozone crisis will affect their business next year. However, the good news is that in spite of this, businesses are still looking at ways to grow. Over half of respondents stated that targeting new clients or markets would be their priority next year.

“Although the majority of respondents saw either regional (47%) or national (34%) markets as the most promising targets, the number of businesses that see international markets as key opportunities has risen from 19% in 2010 to 25% in 2011.

“These figures align with our experience at DLA Piper over the past year, where clients are increasingly seeking cross border advice in terms of joint ventures, acquisitions/disposals,exports and trading generally.

“In light of the current economic situation and the fact that UK exports to the eurozone declined during the second quarter of 2011, it is interesting that the majority of those respondents who are looking heavily towards international markets next year are almost equally divided between Europe and the growing opportunities of the BRIC countries.” 

Neil McTiffin, consulting partner at PwC in the North West added: “Private companies in the North West are telling us that they are concerned about how the eurozone crisis might impact on their business and while the majority see regional and national markets as most important to them, their interest in new markets is increasing. This is a trend that is likely to continue during 2012.

“Most private businesses in the region have set their sights on growth despite recognising that significant challenges lie ahead. According to the businesses polled in the North West, the main challenges are reduced demand for goods and services (30%); increased competition (20%) and access to finance (16%).”

A selection of affirmative answers to the question: Do you anticipate cuts to public spending having a direct impact on your business?

“Public spend cuts have an impact on every business as the available money in the economy decreases.”

“We can not take this amount out of the local economy and expect it not to have an effect.”

“Price cutting by local authorities will have impact on margins.”

“Takes demand out of the economy and affects everybody.”
 

Do you agree with the findings? Please leave your comments below.