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North West
Business Confidence slumps to lowest level since 2009
THE Business confidence has slumped to its
lowest level since the depths of recession in 2009, according to the
latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM).
The BCM Confidence Index in the North West region has fallen to
-10.5 from a Confidence Index of 6.4 just 3 months ago. The score is
a massive decline on the post-recession high of 24.3 in the first
quarter of 2010.
The survey, which questions senior business professionals in the
North West, also revealed that firms across the region have revised
down their projections for growth, with turnover expected to expand
by an average of 3.2% over the next 12 months, down from a forecast
of 6.1% growth over the 12 months to second quarter of 2011.
The BCM has also suggested that the tax burden has become more of an
issue for North West business over the course of this year. 1 in 3
businesses in the region (30%) now report the tax burden to be a
greater challenge than 12 months ago; more than double the share of
businesses who were of this opinion in the same quarter last year
(13%).
However, it is not all bad news. Turnover for North West businesses
has actually seen growth by an average of 2.7% over the last 12
months and exports in the region are still on the up, having grown
by 4.2% on average over the last 12 months; that is the highest
reported growth rate since the fourth quarter of 2008. Domestic
sales have also expanded, by 2.5%, a rate which is modest compared
to levels seen before the recession; but which is nonetheless
expected to continue over the coming 12 months.
Melanie Christie, ICAEW North West Region Director, said:-
"These latest figures show that North West businesses have played
their part in supporting economic growth and many are proud of their
success against a backdrop of a very slow and protracted recovery.
Yet they are becoming increasingly worried about the immediate
outlook and the risk of a double dip recession. They are looking to
Government which now needs to take urgent steps to restore business
confidence and to show that it understands the need to rapidly
change the mood music that the business community clearly feels."
David Grundy, North West managing partner of Grant Thornton, said:-
"There’s no doubt the Eurozone crisis is having a corrosive effect
on business confidence. In recessions people have become accustomed
to the idea of corporates struggling with difficult market
conditions. Sovereign debt is something else entirely and
unprecedented in our generation. There are concerns about the scale
of the debt in Italy, Portugal and Spain, on top of the profound
issues already evident in Greece and Ireland. The UK would not be
immune from any escalation in the current crisis – and people are
aware this kind of financial contagion can certainly create balance
sheet problems for European banks. That said, there are definitely
some encouraging trends across the North West. We are continuing to
attract inward investment as a region and the coalition’s
back-to-basics programme of infrastructure investment will do a lot
to increase the productive capacity of the economy over the medium
and long-term. SMEs in particular need to feel more confident about
getting back out there, and there are plenty of developments in the
pipeline which will encourage this as we move into 2012."
Growth forecasts continue to fall... This quarter, businesses in the
North West report turnover has grown by an average of 2.7% over the
last 12 months, unchanged from Q3(Quarter 3) 2011. However, annual
growth in gross profits has fallen from 3.1% over the 12 months to
Q3 to 1.9% over the 12 months to date.
Firms have also revised down their projections for growth. They
expect turnover to expand by 3.2% over the next 12 months, down from
a forecast of 6.1% growth over the 12 months from Q2 2011.
Similarly, firms expect lower rates of growth for gross profit and
sales volumes over the coming 12 months, with a forecast of 2.4% for
gross profit (down from 4.5% in Q2) and 3.8% for sales volumes for
Q4 (down from 5.2% for the year from Q2 2011).
Overall, financial performance expectations in the region have
continued to fall in line with the sharp fall in business
confidence, as the global economic outlook has weakened in recent
months.
Exports growth is expected to weaken. Businesses in the North West
report exports have grown by 4.2% on average over the last 12
months; the highest reported growth rate since Q4 2008. However,
firms have revised their expectations for export growth down sharply
from 4.8% for the 12 months from Q3 2011 to 3.0% for the coming 12
months. This is the weakest forecast for export growth since Q2
2010.
Firms in the region report that domestic sales expanded by 2.5% over
the last 12 months. This is a fairly modest rate of growth compared
to levels seen before the recession, and firms expect growth to
continue at this rate over the coming 12 months. Even so,
supermarket chain Waitrose has said it plans to open at least 10 new
shops in the North West in the next five years, creating 1,500 jobs.
The retailer said it aimed to spend £100m on new sites in the
region, including a £35m distribution centre in Chorley, Lancashire,
to open in 2012.
Transport infrastructure cause for concern... Over the course of
2011, the proportion of businesses apparently concerned about the
transport infrastructure has been increasing. This quarter, nearly
one in three firms (28%) report transport problems to be a greater
challenge to business performance than 12 months ago, up from 16% in
Q4 2010. The European Investment Bank has agreed to provide a £500m
loan to facilitate the expansion of Greater Manchester's Metrolink
network. This Metrolink expansion is the single largest investment
in public transport in the UK, outside of London. In addition, BCM
suggests the tax burden has become more of an issue for North West
business over the course of this year. One in three businesses in
the region (30%) now report the tax burden to be a greater challenge
than 12 months ago, more than double the share of businesses who
were of this opinion in the same quarter last year (13%).
For further information please go to the ICAEW
website.
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Government must
launch enterprise education drive to avoid a lost generation of
jobless youth
THE Government must launch
an urgent nationwide programme of enterprise education to avoid
creating a lost generation of British youth, the chief executive of
Young Enterprise said on Wednesday, 14 December 2011. With Britain
still seeking signs of growth, new figures show greater amounts of
progress needs to be made to tackle unemployment, especially among
young people. Figures released from the Office for National
Statistics show an increase in unemployment of 128,000 on the
quarter. There are now 2.64 million people out of work in the UK and
301,000 of them are from the North West of England. As the latest
official figures showed unemployment among young people rising at an
alarming rate, Ministers should act to boost the 'employability'
skills of young people and give them the option of running their own
businesses at some point in their lives.
Catherine Marchant, interim Chief Executive of Young
Enterprise, the UK's largest enterprise education charity said
that:- "Young Enterprise believes the Government must take
urgent action now to improve the job chances of Britain's young
people to help them compete in the global market place. No one
disagrees that high standards in English, maths and science are
essential. But with the economy showing no signs of recovery any
time soon, young people more than ever need schools to teach them a
much wider set of 'employability' skills. These include teamwork,
taking responsibility, thinking globally, reliability, confidence
and ability to innovate; all qualities that companies look for when
choosing new recruits. Employers are crying out for people who can
do more than answer questions on an exam paper. That is why 188
major companies signed the Young Enterprise Charter calling for
enterprise education to be established in the official National
Curriculum. We must give young people a decent chance not just to
take a job; but make one for themselves too by being given the
skills to make self-employment an option at some stage in their
lives." Carmen
Watson, Managing Director of Pertemps Recruitment Partnership, also
echoed this by saying in a press release that:- "These figures
are a stark reminder of the challenges we face as a nation going
into 2012, particularly with long term unemployment posing such a
great risk to personal finances and the economy as a whole. Youth
unemployment remains high and with women also disproportionately
affected in this month’s figures, there is still a hill to climb.
The important task is not just to get young people working, but to
get them into sustainable employment. This means that training
providers should shift their entire focus to getting young people
job ready and into suitable roles and not trying to put square pegs
in round holes. Meanwhile, employers should be prepared to
accommodate the new breed of young worker. These are the potential
employees who have the talent but also require the nurturing and
mentorship needed to acclimatise to new working environments.
Investment in young talent and skills is a strategy with longevity
but often the transition from education to working life is a
struggle. We need to engage with young people in this way if we wish
to boost the economy."
Liz Field, CEO of the Financial Skills Partnership
also added that:- "The financial services industry is
Britain’s economic engine; amounting to 10% of the country’s GDP and
responsible for 1 in every 9 pounds of the Treasury’s tax revenue.
It is alarming that the flatlining in the jobs market has so
adversely affected one of Britain’s most important sectors. The
growing problem of unemployment affecting 16 to 24 year olds makes
it all the more urgent that the jobs crisis is addressed. Drastic
measures are needed to reverse this worrying trend that is rapidly
damaging growth prospects of the UK. The FSP continues to work with
employers to help create opportunities for young people through
placements and developing appropriate apprenticeships that will
provide work opportunities and the essential skilled talent needed
to maintain the importance of the finance sector to the UK economy."
As the unemployment figures maintain the spotlight of
many headlines at the close of 2011, what will 2012 bring us? It is
true that the 16 to 24 year old age bracket is disproportionately
affected by the stunted economic growth plaguing Britain. This is
concerning for the future well being of the UK, but how can we find
them employment to break this trend? Email your views to
news24@southportreporter.com and let us know what you
think should be done to fight the increasingly difficult job market
problems. Also if you are in the 16 to 24 year old mark, please let
us know if you are finding it hard to get work.
Growth in aerospace industry at
the top of the agenda
THE Business Secretary
Vince Cable earlier this week hosted an Aerospace Business Leaders
meeting; involving top executives from Airbus, Rolls-Royce,
Bombardier Aerospace, GKN, Finmeccanica and ADS; to discuss the
opportunities for growth in the UK aerospace sector. The high
level meeting discussed how, working together, the industry and
Government can address barriers to growth, boost exports and
increase the number of high value jobs in the UK. The meeting also
looked forward to the planning of the 2012 Farnborough Air Show.
Business Secretary and co-chair of the Aerospace Business Leaders
group Vince Cable, said:- "With around 100,000 people employed
all around the country and contributing around £23bn a year to our
economy, the aerospace sector is central to our plans to rebalance
the economy. The global aerospace market is constantly changing, it
is important that Government works closely with our leading
businesses to provide support and help the industry maintain its
world leading position. The internationally renowned Farnborough Air
show next year, gives us an ideal opportunity to showcase the very
best that British aerospace manufacturers have to offer. Our
aerospace companies also have a diverse supply chain of some 3,500
companies in total, most of which are SMEs. However the evidence is
that the UK aerospace supply chain is losing work overseas. That’s
why we announced a fund of up to £125 million to help reverse this
trend and ensure that the sector can benefit from the massive growth
that will take place in the global aerospace market over the next 20
years." Action from previous meetings of the Aerospace
Business Leaders forum is already underway through the Aerospace
Growth Partnership; chaired jointly by Mark Prisk (Minister of State
for Business and Enterprise) and Marcus Bryson (CEO of GKN
Aerospace); with wide representation from business, government and
academia. |
