Confidence falls despite growth expectations

BUSINESS confidence in the North West has fell to the lowest level since Q3 2009 despite relatively strong growth expectations for the next 12 months.  100 senior business professionals in the North West were interviewed and recorded a confidence index score of 14.4 in the Q2 2010 ICAEW UK Business Confidence Monitor (BCM). The confidence index for the North West has decreased by 9.9 points from the last quarter, the steepest fall for any region in the UK.

Despite being the less confident than the rest of the UK, firms in the North West have relatively strong expectations for growth in key performance indicators. Turnover is projected to rise by 5.4% over the coming 12 months, following a decline of 0.4% over the last 12 months. This is the strongest forecast for turnover growth since the first 3 months of 2008. Firms in the North West also expect the steepest rise in sales volumes since Q1 2008, with 5.1% growth forecast for the coming 12 months.

In line with news that a number of house builders in the North West, including Redrow Homes, are predicted to return to profit for the first time in 3 years, the region’s firms are forecasting profits growth of 4.4% over the coming year. This is the most positive forecast for profits growth since Q3 2008 and follows a contraction in profits of 1.2% over the last 12 months.

Melanie Christie, ICAEW North West Regional Director, said:- “The North West results of the latest BCM show that businesses are not allowing themselves to become complacent and remain cautious about the outlook. The economy still faces significant challenges, many of which are outside of businesses control. Until prospects for the future become clearer, UK plc is continuing to manage risk, cut costs and not expose itself to potential risks outside its control, leading to a slower than expected recovery. ”

Poor employment outlook for firms in the North West

Reflecting their region’s status as one of the two least confident regions, businesses in the North West have the lowest expectations for growth in employee headcount of any part of the UK. The number of employees in the North West is expected to grow by only 0.5% over the next 12 months, compared to 1.1% growth for the UK overall. A similarly cautious outlook for staff development budgets is also expected, with projections of 0.7% growth in the North West – again the lowest of any part of the UK.

However, compared to some other regions, the labour market in the North West has held up relatively well over the last year. Headcount has fallen by 1.7% over the last 12 months, compared to a 2.0% fall for the UK overall. This is also borne out by official statistics, which show that the employment rate in the North West suffered the smallest fall of any part of the UK during 2009.

Exports forecast cut as eurozone troubles worsen

Firms in the North West have revised expectations for export growth downwards for the coming year, as the future of the eurozone – the UK’s largest trading partner – looks increasingly unstable. Exports are projected to grow by 2.3% over the coming year, down from an expected growth rate of 3.0% in Q1. In contrast, domestic sales are expected to grow by a healthy 5.7% over the coming 12 months, up from projections of 5.1% growth in the last BCM.

Firms more confident they can expand into new areas

This quarter a smaller proportion of firms report that their ability to expand into new areas is a greater challenge to their business compared to a year ago. 12% of firms report this trend, the most positive picture for this measure ever recorded by the BCM. A recent example of a new offering in the region is provided by easyJet founder Stelios Haji-Ioannou, who recently announced plans to open the first easyOffice site north of London in Manchester.

Challenge of access to capital persists for firms in the North West
In contrast to the trend seen throughout most other regions in the UK, accessing finance has not diminished as a business challenge in the North West over the course of the past 12 months. 34% of firms in the region report access to capital poses a greater challenge to business performance compared to a year ago. This is the worst picture for this measure recorded by BCM in the region, and is up from 29% in Q1 2009 when credit markets froze and the economy suffered its worst ever quarterly contraction of output.

This finding is also not consistent with results from the Bank of England’s recent Credit Conditions Survey which showed that the availability of credit to corporates continued to ease at the start of 2010, with demand for credit by small and medium-sized private non-financial corporations rising more strongly than anticipated. However, it was also noted in the same report that spreads and fees had widened slightly for small businesses over the first three months of 2010.

Melanie concludes:- “Stabilisation is the key theme from this quarter’s Business Confidence Monitor. There has been a broadening of recovery in more sectors, regions and sizes of business. The data also points to the beginnings of a rebalancing of the economy, something that had to happen. Although welcomed, it will be a long time before we reach the growth and indeed expectations of businesses compared to those heady days pre-recession.”

NEXT OF KIN APPEAL - BARNIE BARNSLEY (AKA DAVID SMITH)

LIVERPOOL Coroner's Office are now appealing for the next of kin of a man who died on Thursday, 17 June, 2010, to come forward. Barnie Barnsley, aged 62, was found dead at his home on Hartsbourne Avenue, Childwall.

There are no suspicious circumstances surrounding his death. It is believed that Mr Barnsley, was previously known as David Smith. The coroner's office is now trying to trace his next of kin.

Any next of kin, or anyone who knows of his next of kin, is asked to contact Liverpool Coroners Office on:- 0151 233 4705.

THE SEARCH IS ON FOR BUSINESS HEROES

A search to find Britain’s most inspirational men and women who have beaten the odds to succeed in business gets underway with the launch of the fifth annual Barclays Trading Places Awards.

Enterprising individuals who have triumphed over personal adversity to turn their business dreams into a reality have until Friday 16 July to tell the judges their story – and why they should win a share of the £50,000 prize package.

This year’s Barclays Trading Places Awards will also invite people to nominate someone they know who deserves national recognition and in spite of facing some of life’s greatest challenges, are running their own business – for example, a member of their family or even their boss.

Previous finalists have included Bradley Stewart who was left paralysed after a car crash and went on to set-up a mobile disco business, Tracy Mackness who studied farming whilst in prison and now runs a successful pig breeding company, and husband and wife team Kevin and Nikki Sweet, who beat redundancy and long-term unemployment to start a new life in the Welsh countryside as cider makers.

Steve Cooper, chair of the judging panel and Managing Director, Barclays Business, said:- “Trading Places is a celebration of men and women who, in spite of great personal challenges, have taken steps to establish a sustainable business and in doing so changed the direction of their lives for the better.   We are delighted to have this opportunity to recognise their achievements whilst highlighting an increasingly important sector of the business community – whether they are sole traders or small businesses that together underpin our economy.”

Everyone entering the Awards will have access to a range of business support packages featuring specialist advice and expert mentoring.  Barclays will present the overall winner with a cheque for £10,000, and the runner-up with £5,000 for their business, at a prestigious black-tie gala dinner at The Savoy in London on Tuesday 30th November to be attended by more than 300 VIP guests. 

Awards supporters Microsoft and Yell will also be offering tailor-made packages for the 10 National Finalists, including the latest business software and special multi-media advertising packages.  Other Awards partners include youth charity The Prince’s Trust, Leonard Cheshire Disability, the NFEA, Crisis, PRIME and the cdfa.

Entry forms are available in Barclays branches, by calling the Awards Office on:- 020 8673 2020 or by visiting:- barclays.co.uk/tradingplaces.

Small business support group welcomes key Budget victories for SMEs

SMALL business support group the Forum of Private Business has welcomed a number of key victories for SMEs in this new Budget.

The Forum believes the 1% cut in small companies’ tax, together with the new £5 million threshold for entrepreneurs’ relief on capital gains tax (CGT), are positive measures which contributed to a small business-friendly Budget overall.

The Forum also believes measures to extend the Enterprise Finance Guarantee scheme, abolish back-dated business rates and continue tax breaks for holiday lettings further demonstrate the new Government’s appreciation of small business-related issues.

Further pledges to review all employment law, outlined in the full Budget document, have also been warmly welcomed by the Forum. The proposals, forcing each Government department to review the employment regulations laws for which they are responsible, come following the Forum’s calls for a review of all workplace legislation.

Forum chief executive Phil Orford said:- “I think many small business owners will be pleasantly surprised by the Budget. Not only did the Chancellor make all the right noises about supporting enterprise and smaller businesses, he backed it up with concrete, tangible policies. Obviously, the VAT rise will have an impact on many smaller businesses, either directly or indirectly. However, the money to pay off the deficit has to come from somewhere and I expect most Forum members would rather stomach a VAT increase than a rise in other taxes, or even greater cuts in public spending. The 1% reduction in small companies’ tax is obviously more than welcome – it’s something we and the SME community have long called for. It also represents a 2% cut in real terms as the previous government had planned to increase small companies’ tax by a further percentage point. The rise in CGT had proved controversial with business owners ever since the idea was first put forward, but the 28% rate is a gentler increase than many people were expecting. More importantly, the rise in the entrepreneurs’ relief threshold to £5 million is more than we could have hoped for and it should ensure that most small business owners aren’t penalised too heavily when they come to sell their companies. The pledge for a wholesale review of employment law – quietly announced in the full Budget document – is also a highly welcome one. Our members frequently cite employment law as one of their main areas of concern so any moves to simplify and rebalance the regulations affecting smaller employers have got to be welcomed. The moves to limit rises in National Insurance, introduce NI exemptions for some new employers and raise the income tax threshold were also positive, even though they were watered-down from the Conservatives’ original pre-election promises. What we will be calling for now is a guarantee of genuine private sector input into the white paper on local economic growth Mr Osborne mentioned. We want to see it focusing on smaller business-led innovation and jobs in regions that are likely to be affected by public sector job cuts. We will also be lobbying the government to make sure the ‘fuel price stabilizer’ Mr Osborne referred to becomes a reality. Extortionate petrol and diesel prices represent a huge inflationary problem for smaller firms and could threaten recovery if left unchecked.”