The latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM) shows that business confidence in the East Midlands has fallen again, and now stands at +24.3 as economic uncertainty impacts on firms’ plans for the year ahead.
Key findings for Q4 2014:
The BCM Confidence Index for the East Midlands stands at +24.3 down from +45.5 earlier in 2014. Confidence is now below the +37.7 reading for December 2013.
Unemployment levels are falling faster than anywhere outside London, which has boosted consumer spending and therefore domestic sales in the area.
Export growth has slowed to 3.1% over the last twelve months adding to concerns over the stability of the Eurozone economy.
Despite reporting robust financial results, businesses in the region are not feeling positive that this will continue, with less growth expected across sales, workforce and turnover.
Tom Madden, ICAEW Regional Director for the Midlands, said:
“Despite the fall in confidence firms have experienced improved business growth, which has been largely supported by a dramatic increase in domestic sales. However, businesses are not expecting this trend to continue and this is knocking their confidence. Businesses are paying their staff higher wages, which indicates a shortage of relevant skills in the area – as unemployment has decreased there is more competition for skilled workers. But there are two sides to every coin, as salary increases can lead to a rise in consumer spending, benefiting the local economy.”
Chris Frostwick, partner and practice leader at Grant Thornton in the East Midlands, added:
“There are signs that cooler conditions are approaching. Although conditions in the East Midlands are currently much improved and confidence is still relatively high, businesses are starting to feel uncertain about their prospects for the year ahead. The outcome of the upcoming general election is adding to uncertainty amongst business leaders, as it has the potential to affect not only the shape of our domestic future, but potentially also our place within the EU.”