Confidence among West of England firms has slumped to its lowest level since 2012 as they continue to react to the EU referendum, according to a new survey.
The latest quarterly ICAEW Business Confidence Monitor (BCM), which gauges how businesses view the economic prospects facing them over coming year, shows confidence falling into negative territory.
Despite this, businesses still expect their domestic sales to continue to grow at almost the same rate as the past year while they will continue to create roughly the same number of jobs in the next 12 months.
The survey was conducted among 1,000 chartered accountants working in a wide range of business across England and Wales between April and July and so reflects the mood in the run-up to, and just after, the landmark referendum.
The interviews gather opinions on past performance and future prospects for members’ businesses, as well as investigating perceived changes in impact of factors such as availability of skills, government regulation and the tax regime.
The ICAEW – the main professional body for chartered accountants – then works with analysts at Oxford Economics to extract regional data from the results.
Key South West findings:
- The ICAEW Business Confidence Index for the South West now stands at minus-14, the weakest it has been since the first quarter of 2012
- Despite this, domestic sales are 5% up year on year in the current quarter, and expectations are for 4% growth in the year ahead
- The proportion of firms that cite customer demand as a growing challenge is now at 29%, a record low for the region
- Job creation is predicted to be at a similar pace to the past 12 months, at 2.2%
ICAEW South West director Jon Blake said businesses in the region were resilient and were rising to the challenge of Brexit.
“Business confidence in the South West is markedly weaker this quarter as businesses have reacted to the results of the EU referendum, as you would expect them to,” he said.
“Despite the drop in confidence in the region and after the political surprise of the referendum results, many are getting on with delivering their business plans and moving forward.
“Businesses in the South West are resilient and reflecting the relatively robust sales growth, the proportion of firms citing customer demand as a challenge is now at a record low for the region. Similarly, job creation is showing few signs of slowing.
“Exchange rate changes are likely to have both a positive and negative impact on the region’s businesses.
“There may be new opportunities to export in the region, helped by depreciation in the pound which will make exports cheaper to non-sterling customers.
“However, this is countered by imports becoming more expensive for UK businesses.
“There may also be additional opportunities for the region’s tourism sector. As a result of the depreciation in sterling as the UK has become a more affordable destination for foreign visitors and a weaker pound will also increase the likelihood of UK residents visiting the region.”
