Business confidence in the region continues to fall

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Business confidence in the region continues to fall

The Institute of Chartered Accountants in England and Wales 11 June 2019

Business confidence for Yorkshire & Humberside has fallen further this quarter – the fourth successive quarter in which the region’s index score has been below zero. This is despite businesses reporting stable sales rises, slower cost increases and faster profits growth. Companies though are facing several challenges, particularly in recruiting and getting the right skills.

James Callaghan, ICAEW Yorkshire & Humber Director, said:

“Businesses I speak to in Yorkshire & Humber say that there is no sense that things will change much in the next few months and this is reflected in their confidence. Although some financial
indicators are stable, companies in the region are facing lots of business challenges. Regulatory requirements are more of an issue as well as the availability of non-management skills compared to a year ago”

Exports and domestic sales

Although business confidence is weaker, sales growth within the region is fairly stable, with domestic sales (3.4% year-on-year) and exports (3.2%) expanding at broadly similar rates to a year ago. Such growth rates are also comparable with national rates in Q2 2019. Businesses also report faster profits growth this quarter, reflecting rises in sales combined with stable wage growth (unchanged from last year at 2.2%) and an easing of input price inflation, from 3.0% a year ago to 2.3% in the year to Q2 2019.

Business challenges

Despite these positive developments, companies are facing a number of challenges. Regulatory requirements remain the most widespread issue, with 47% of businesses in the region reporting growing concern over these. There are also pressing labour market worries. Indeed, 27% of companies are becoming increasingly challenged by the availability of non-management skills, up from 18% a year ago. Investment While overall confidence is down, investment growth among businesses is healthy. Research & Development (R&D) budgets are rising by 3.5%, compared to just 1.8% in the year to Q2 2018 and capital investment growth is marginally faster than last year, at 2.6%. However, in the year ahead, businesses project only limited increases in spending, with growth across all forms of investment forecast to slow.

Prospects for the next 12 months

Businesses expect the pace of exports and profits growth to ease, to 2.9% and 3.8% respectively. And little change is forecast for domestic sales, which are set to rise by 3.3% in the year to Q2 2020. This underscores the weakness in overall confidence that characterises businesses in Yorkshire & Humberside.


Media Enquiries:
Caroline Florence, ICAEW press office, on 0207 920 8564 / 07973 400264 or caroline.florence@icaew.com.

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