Region’s businesses report widespread capacity as exports fall sharply

Most businesses in the West Midlands operated below capacity this year, the highest of any UK region, a report released today reveals.

The ICAEW Business Confidence Monitor found that seven in 10 businesses were operating below capacity.

A sharp fall in exports, and challenges facing the region’s car manufacturing industry which has been particularly exposed to uncertainty around the outcome of UK-EU trade negotiations, were some of the key factors in companies having spare capacity.

Meanwhile, business confidence in the region was in firmly negative territory.

Companies in the West Midlands cited customer demand and late payments as pressing challenges but predicted rebounds in domestic sales and exports in the year ahead, ICAEW said.

However, the second lockdown is likely to slow the pace at which sales performance can recover.

Dr Sophie Dale-Black, ICAEW regional director for the Midlands, said: “It comes as no surprise that business confidence in the West Midlands is low, given the impact of coronavirus restrictions and Brexit uncertainty on the region’s manufacturing industry.

“We urge the government to double-down on its efforts to secure a fair trade deal which will help stimulate and sustain the UK’s post-COVID economic recovery.”

Nationally the BCM findings showed that the proportion of companies struggling from a lack of demand had increased from more than a third in Q4 2019 to over half this quarter.

Late payments were a rising concern for a third of businesses, indicating financial distress in the market.