State of the Region: Eurozone crisis challenges growth plans
ALMOST 70% of West Midlands business leaders believe the lack of a solution to the Eurozone debt crisis will have a major impact on their firms during the next 12 months.
Due to this, TheBusinessDesk.com’s State of the Region survey 2012 also reveals the overwhelming majority of respondents (74%) are looking to regional and national markets to supply growth opportunities because of the increasing instability of the euro.
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 Yorkshire, the North West and West Midlands.
Respondents suggested Europe would offer little hope for growth, with just 10% saying they were looking to the region for growth. Somewhat disappointingly, just 9% were focussed on the BRIC economies of Brazil, Russia, India and China, while only 5% said the United States offered any hope for new business.
This attitude was not only prevalent in the West Midlands as the pattern was mirrored in the other two regions.
Nevertheless, almost two thirds (59%) of businesses in the West Midlands said they expected to grow during the next 12 months, while 38% said they expected to grow staff numbers this year and 47% said they expected numbers to remain the same.
Encouragingly, 51% of respondents in the region said they would be targeting new markets and clients in order to generate new business, with a further 29% saying they were developing new products or services in order to tap into new markets – the highest figure across the three regions by some considerable margin ( Yorkshire 8% and North West 10%).
Scares about access to finance do not appear to stand up as two thirds of businesses (64%) said they felt they had adequate support from banks and other investors.
However, the spectre of further public spending cuts is casting a shadow over events, with 56% of respondents believing the situation will impact on their business during the next 12 months.
Mark Beardmore, Office Managing Partner, DLA Piper in Birmingham, below, 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. Over two thirds of respondents believe that the Eurozone crisis will affect their business over the next twelve months. 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 in the coming year.
“Although the majority of respondents saw either regional (38%) or national (36%) markets as the most promising targets, the number of businesses that see international markets as key opportunities has seen a significant rise from 19% to 25% compared with last year. These figures align with our experience at DLA Piper over the past year, where clients are increasingly seeking cross border advice in terms of both acquisitions/disposals and exports.
“In light of the current economic climate and with statistics demonstrating 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 towards international markets are almost equally divided between Europe (10%) and the growing opportunities of the BRIC countries (9%).”
Mark Smith, regional chairman at PwC in the Midlands, left, said: “Private companies in the Midlands 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 West Midlands, the main challenges are reduced demand for goods and services (34%); increased competition (20%) and the impact of the spending cuts (12%).”
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Tomorrow: The region
