Business confidence declining in the West Midlands
BUSINESS confidence in the West Midlands has declined after a strong year in 2014, according to an influential new report.
The latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM) suggests companies have become more cautious about their prospects in the year ahead.
It said while there were indications of the trading environment stabilising, after a hiring boom during the last 12 months, skills shortages were now starting to emerge, threatening any sustainable recovery.
Tom Madden, ICAEW Regional Director for the Midlands, said: “On the ground, businesses are reporting that both customer demand and marketplace competition have become more challenging over the last year, which is putting a dent in firms’ expectations, despite continuing growth in the region.
“The outcome of the General Election and uncertainty in the Eurozone are vital factors affecting business confidence in the West Midlands, with employment growth and capacity levels triggering further concerns. Headcounts in West Midlands companies have increased 3.4% in the last 12 months, but with lower unemployment businesses are struggling to find the skills they need, or having to pay more in order to secure appropriate employees.
Dave Munton, regional managing partner at Grant Thornton, added: “With the political uncertainty at home and the economic troubles within the Eurozone, it is perhaps no surprise to see confidence levels dip. It is a concern, however, to see that a large percentage of businesses in the region are operating below capacity – 61% compared to the national average of 49%.
“Combined with a lowering of confidence this quarter, this appears to be contributing to a cooling in capital investment plans across the West Midlands for the coming year which could, if left unchecked, threaten growth in future years.
“To boost business confidence levels, we believe that a step-change in mind-set is needed from whichever party (ies) take residence in Downing Street. This must include considerations for supporting our businesses in new markets abroad, particularly where demand for ‘Brand Britain’ carries a premium.”
The key findings for Q1 2015 were:
• The BCM Confidence Index for the West Midlands stands at +18.4, down from +36.0 last quarter – reflective of a more challenging business environment
• Businesses expect growth in both domestic and export markets to hold steady. However, continuing difficulties in the trading environment may put pressure on companies to match growth from 2014.
• More businesses thought availability of skills is a greater issue now than at the same time last year
• 61% of businesses in the region are operating below capacity, affecting capital investment plans for the year ahead
