Business confidence in the East Midlands dropped in the last quarter, as expectations of future growth have levelled off. The latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM) indicates that businesses have seen growth over the past year, but market pressures are having an effect on their prospects.
Key findings for Q2 2015:
· The BCM Confidence Index for the East Midlands stands at +12.6, down sharply from +26.7 last quarter, and well below the level seen this time a year ago
· 45% of businesses are reporting that customer demand is a greater challenge to their performance, up from 39% a year ago
· Companies have on average reported turnover increasing by 4% over the last 12 months, helped by a fall in input price inflation (0.6%, down from 2.2%
Tom Madden, ICAEW Regional Director for the Midlands, said:
“The prolonged period of political and economic uncertainty has clearly had a material impact on business confidence in the last few months. With a clear majority, the incoming Government now has to move quickly to get the UK economy moving forward again.
“The first priority should be to grow our exports. The UK desperately needs to rebalance the economy. As the BCM reveals, the gap between our exports and domestic demand is widening even more. While growth built on domestic demand is fine for the moment, soon the benefits of low inflation and cheaper petrol will evaporate. It is crucial that we look to boost our exports both inside and outside the EU. Businesses need to think global from the start, and we need to make it easier for them to trade internationally.”
Chris Frostwick, partner and practice leader at Grant Thornton UK LLP in Leicester, added:
“The good news in this, notwithstanding the apparent decline in confidence, is the growth in turnover levels. Some of this will be attributable to the market accepting price increases in many sectors, and the rest will be real underlying increases in volumes. I have a suspicion that what we are seeing in this survey is an apparent lack of confidence because of political uncertainty, but the actual day-to-day results being better than the confidence levels would suggest.”
