Business confidence slips in the North

Business confidence in the North of England has fallen back after a boost in Quarter 2 2012. In Q3 2012, following interviews with senior business professionals across the region for the latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM), the Confidence Index locally stands at 7.5, compared to Q2’s 28.4 high.

ICAEW Regional Director Keith Proudfoot comments: “Much has been made recently of problems facing businesses in this region, however over the year to Q2 2012 we noted strong performance, which had fed the higher confidence reported last quarter.  Growth in key financial performance indicators has slowed down this quarter which supports the drop in confidence.  However there are some positive signs that this recession will be a shallow, if long lasting, recession as businesses report they expect turnover to increase by 4.8% in the next 12 months, the highest expectation since Q3 last year.

“There is also an anticipation of rising orders from overseas customers, with expectations of 4.6% export growth over the next year. Whilst certainly not spectacular, this is good news for the region’s growth outlook and comes despite the eurozone, to which businesses in Northern England sell almost 50% of goods exports, remaining in economic crisis.”

Staffing levels also look more optimistic.  Firms in Northern England report they increased employee numbers by 2.6% over the past year, the fastest growth rate in four years. These latest BCM findings are reflected in official labour market data, which showed the region’s employment level rising year on year by 7,000 workers during the three months to May.

Private sector job creation is of course important for a region with 23.9% of workers employed in the public sector in Q1 2012.  These employment levels remain at risk from government cutbacks.

Good news on job creation over the coming year comes from plans to build the world’s largest renewable energy plant in Teesside, to be ready for operation in 2014. Construction is expected to support 700 workers, with 50 permanent jobs remaining once the plant opens.

The tax burden is becoming a less widespread issue in Northern England. This quarter, just over one in ten companies (11%) report their tax burden as a greater challenge now than a year ago, having trended generally downward from a high of 27% in Q3 2011.

The Tees Valley Enterprise Zone (EZ) gained its first businesses this summer with Omega Plastics and Propipe Limited. The EZ offers financial incentives and relocation support to attract firms to the region, with the managing director of Omega Plastics stating that the five years of business rates relief will allow the firm to invest more heavily in product development.

Despite this, there are signs that more could be done to enable the region to appear business-friendly, as the proportion of firms finding regulation a concern remains high.