Firms more confident of growing their business – PwC

ALMOST two thirds of Midlands companies (63%) are more confident about their ability to grow their business in the coming 12 months compared with last year, financial experts have said.

However, according to a poll of UK plc directors by PricewaterhouseCoopers only 20% believe the UK remains a competitive environment for business.

PwC said the results suggested the downturn has left business confidence in the economy severely shaken.

The findings, from a poll of companies attending the recent PLC Awards, of which PwC is one of the key sponsors, do however provide some grounds for optimism.

PwC said there were signs of an improving environment as 73% of companies surveyed said they had no problem accessing finance, suggesting the liquidity issues caused by the economic crisis are at last easing.

Keith Harrington, partner at PwC in the Midlands, said: “Midlands businesses appear to have more faith in their ability to manage their own companies but lack confidence in the wider economy.

“This is a challenging situation because an improved business environment for individual companies is clearly dependent on the restoration of confidence in the wider economy.”

He said with business investment remaining lower than at any time since 1992, to move firmly out of the recession, there needed to be significant improvements in the business climate so that individual companies were able to invest for the medium and long-term.  

“Essentially, there seems to be a chicken and egg situation at play – for the wider economy to improve, this investment needs to happen, but there remains considerable uncertainty about the health of the economy and the potential consequences of a double dip recession to individual businesses,” he said.

“Given the indications of improved availability of capital in the market, there is some hope that this will act as a catalyst in helping to restore much needed confidence among UK plc directors.”

Other key findings from the survey show that the vast majority of firms (77%) believe they have a deep understanding of all the major risks to which they may be vulnerable, while (73%) consider that the Government should do more to help with access to finance.

Almost two thirds (58%) are in favour of tax rises to help Government close the fiscal gap.

“Our survey shows that the recovery is regarded as a joint effort between the Government and business,” said Mr Harrington.

“Midlands businesses are looking to the Government to help create the right environment for them to thrive and Government will be looking to business to invest for the future.

“The major issue on the agenda is how the fiscal deficit will be managed while continuing to stimulate a business growth environment.”