Nearly two-thirds of West firms are optimistic about their prospects as the region’s economy starts to improve, with most expecting turnover and profits to increase over the coming year.
Some 65% of the 550-plus businesses from across the region that took part in the latest British Chambers of Commerce quarterly economic survey expressed confidence while 68% predicting higher turnover and 60% increased profits.
But despite these upbeat forecasts emerging from the research, one of the UK’s key surveys which is closely watched by the Bank of England and the Treasury, the recovery in the region still appears weak with the number of firms expecting to take on more staff falling slightly and concern remaining over access to funding.
Phil Smith managing director of Business West, which runs Bath Chamber of Commerce, called the results a “mixed bag” and pointed out that 70% of firms are still operating below capacity.
Domestic sales by West firms remained at the same level as last quarter. However, the number of firms recording an increase in domestic orders fell by three percentage points to 40%.
And while almost four in ten companies recruited staff over the past three months – with 41% of them for new positions – the outlook for employment was slightly negative compared with previous quarter; with a 6% fall in the number of companies expecting to increase their workforce.
Competition (37%) and taxation (22%) remained the main concerns. However both fell slightly – by 2% and 4% respectively – compared to the second quarter. The biggest barriers to growth for West firms were a lack of demand (18%), lack of management time (12%) and finance availability (11%).
Traffic congestion was the transport issue affecting most firms (33%), along with parking charges (22%).
Exporters were the biggest winners of the past three months, according to the regional results.
The value of overseas sales and orders were both higher compared with previous quarter but showed a dramatic increase (up by 34 and 28 points respectively) against the same period last year.
Scores of businesses from Bath and North East Somerset took part in the survey.
Mr Smith said: “This quarter’s results are a mixed bag. We have long-championed the idea that businesses have remained confident about their abilities to grow and it is good to see that even more firms now believe they can increase their turnover and sales, and hire more staff, which is a testament to their hard-work, creativity and ambition.
“The dramatic increase in export sales and orders when compared to this time last year shows that our local businesses are bucking the South West and national trends on export measures.
“There have been less positive results in terms of current and future workforce intentions. The number of businesses reporting an increase in their workforce over the past three months has fallen on the quarter. However, there are encouraging signs as the majority of these roles were full-time and either professional and managerial or skilled manual and technical positions.
“Almost 70% of businesses are working below capacity; worryingly, this indicator has remained at this level over the past year. Likewise, a lack of demand and a lack of management time have remained unchanged over the year as the biggest barriers to growth. Despite this, businesses are positive about their future with 65% reporting that they are confident about their prospects for the coming year.
“Investment is still a concern, and if we are to have a high-productivity, high-skill, high-wage economy then this needs to improve. We have seen many false dawns in recent years and if we are to create the ‘land of opportunity for all’ that the Prime Minister spoke about only last week, we need swift delivery of promises made to get diggers in the ground.
“The Government mustn’t get distracted, and has to put growth first at all times. We will be looking ahead to the Autumn Statement in the hope that the Chancellor uses this opportunity to make a real difference and go all out in the name of growth. As we get closer to the General Election, political parties must not be drawn into politicking for cheap votes at the expense of clear, long-term policies that will help build a truly great economy.”
The British Chambers of Commerce’s Quarterly Economic Survey is produced from responses from more than 7,400 businesses nationwide. It is closely watched by the Bank of England and the Treasury.
This quarter it shows improvements in most key areas for both manufacturing and services compared with second quarter, with many balances now stronger than their long-term historical averages.
