Increasing caution amongst businesses ahead of Brexit as investment plans put on hold

Evidence that companies are looking to manage their costs more closely ahead of Brexit has emerged from a new survey.

West & North Yorkshire Chamber of Commerce, which surveys its members every three months on economic trends, says that more companies have decided to hold onto their cash in recent months.

The Chamber says that, although sales growth remains strong in both domestic and foreign markets, more firms are taking a “cautious and sensible” approach to Brexit.

Increasing profits are also a good sign of confidence in the regional business community, but investment plans have stuttered, the survey says.

Recruitment difficulties continue for some, though, with vacancies left unfilled due to a lack of suitable candidates coming forward for roles.

Mark Goldstone, head of policy and representation at the Chamber, said: “Investment in training gives me cause for concern, as our results this quarter show this at close to its lowest level in years. These results, combined with the near collapse in companies taking on apprentices, should be a wake-up call to government to review the reforms introduced in the last year. Businesses want to make the system work, and train and up-skill people of all ages, but the system as it stands is in need of reform.

“The government needs to listen to the business community, and work with us to ensure more people have access to high-quality apprenticeship training, in order to make the new system work better for everyone.”

A summary of the key survey points:

Domestic sales and orders
Sales and orders remain relatively strong in home markets.  Fortunes look decidedly more positive than the lows of two years ago.  This time around, service sector firms saw a slight dip in sales but order books are buoyant.  Manufacturers were boosted by better sales.
Export sales and orders
Export sales continue their upwards trajectory in the last quarter from their historic low point in 2016. All sectors reported increases in the last three months.
Employment
Labour market concerns continue, with many firms reporting difficulties in finding suitably qualified and/or experienced candidates to fill roles. Fewer manufacturers than last quarter expect their workforce levels to increase next quarter, while more in the service sector expect that to be the case.
Investment
Investment intentions slowed a little over the last quarter for both training and capital.
Business confidence
Confidence remains at a good, solid level, despite member feedback about investment above and further on in the report.  Turnover and profit expectations are both substantially higher than they were two years ago and, although the service sector dipped a little this time around, confidence is generally quite good overall.