Bosses more bullish but seek more help, says survey

MORE than 70% of North West companies are expecting to see their turnover increase in the next 12 months, according to new research.

Business advisers KPMG surveyed 117 companies based in the region with turnover of more than £5m, and found that while a majority (67%) expect profits to rise in the next year, they want to see more stimulus from the Government in the shape of funding support and infrastructure investment.

The results of the firm’s second annual Business Instinct Survey, show that despite more positivity in company boardrooms around the region, a number of concerns are dragging confidence.

Delivering sustainable growth over the next year (57%) was the respondents’ chief worry, followed closely by controlling and reducing costs (47%), and margin erosion (40%).

Jonathan Hurst, KPMG’s regional senior partner and Northern Ccairman, said: “These results reflect the wider economic picture, which, although still challenging, looks more positive following an uplift in the Bank of England’s growth forecast, and recent stronger retail and manufacturing industry output results.

“Our results highlight a number of key challenges that are front of mind for executives – including controlling costs and managing internal risk – so we expect most businesses’ growth to be measured and sustainable.”

The research suggests the region’s businesses have some way to go regarding exploiting the potential in high growth international markets.

While 55% of businesses exporting, or with operations abroad, have exposure to the euro zone, just 15% engage with China, 15% with India and 14% with Russia and South America respectively.

Mr Hurst warned: “Exporting companies’ links to the Eurozone – which remains an unpredictable place to do business – and the limited appetite to target high growth overseas markets could impact the region’s global competitiveness, and suggests that more education is needed. It’s particularly surprising that only 8% of firms that are considering new ventures overseas are exploring opportunities in China and just 5% are looking at India.”

KPMG also asked respondents to identify areas that could improve their experience of doing business in the North West. In the top three results, 42% of leaders earmarked Government-led initiatives, 38% pointed to the availability of talent and 30% cited improvements in bank lending conditions.

Mr Hurst added: “Initiatives such as Funding for Lending and the Business Growth Fund have given direct or indirect boosts to a host of regional industries, but our survey sends a clear message that leaders want more Government support, both for growing firms and via infrastructure investment – which has historically been more focused in the South.

“While the North West unquestionably has some of the best education institutions in the world, this insight suggests that we face another strategic challenge in nurturing and retaining our professional talent if we are to support businesses’ growth ambitions.”

Looking ahead, bosses predict that Technology, Media and Telecoms (TMT) (44%) will have the most positive economic impact on the region in the coming 10 years, after significant investment in the sector around MediaCity, Sci-tech Daresbury and the Sharp project.

This is followed by the more traditional aerospace and defence (33%) and manufacturing (25%) industries, highlighting their enduring importance to the region.