Business confidence is at a high in the North East with companies expressing positivity for future growth and job creation, two separate surveys have shown.
The United Growth Report by accountancy group Sumer and The Entrepreneurs Network found that North East SMEs are among the most positive across the UK in terms of their future growth and job creation prospects, although results showed companies are not immune to economic challenges facing the rest of the country.
The research was carried out to reveal the challenges and opportunities facing UK business owners and entrepreneurs, with more than four-fifths of North East business owners (84%) saying they felt their region had a strong business community, the highest figure recorded in any of the 12 UK regions and nations. A total of 78% also said they expected to grow their turnover in the coming year, matched only by Northern Ireland SMEs, while 74% said they expect to hire more staff over the coming year.
On the downside, however, more than two thirds (68%) said they had come close to closing their businesses in the last six months, a figure only behind Northern Ireland and well above the 44% national average. A very high proportion, 92%, also believe that economic inequality between the regions of the UK was a problem, especially with regard to under-investment, skills shortages and potential economic stagnation, while taxes and regulations were also singled out as the main obstacles to growth.
Stephen Slater, commercial services director at RMT Accountants and Business Advisors, which is part of the Sumer network, said: “The North East economy has always been built on the resilience and optimism of its small businesses, and it’s clear that today’s regional business owners are facing the challenges ahead with the same degree of robust self-belief.
“This reflects a broader confidence among our entrepreneurs that key drivers of business success will improve in the coming year, with their commitment towards growing both their turnover and their workforces boding well for the future.”
Meanwhile, business confidence rose for the fourth quarter in a row in the ICAEW’s Business Confidence Monitor (BCM) for the North East, amid strong sales growth and strong expectations for the year ahead. The survey showed confidence tracked at 20.0 on the index for the third quarter of 2024 – higher than both the UK-wide figure of 14.4 and the region’s historical average – underpinned by strong sales growth, which at 6.9% reached a higher rate than in any other part of the UK.
Annual exports growth also increased for the fourth quarter in a row, matching the UK average of 2.7%, and a further growth is expected for the year ahead, contributing to the strong confidence reading. However, companies continued to face several growing challenges, including the availability of skills, despite the North East having the fastest annual employment increase in the UK.
Businesses in the North East were less concerned about the tax burden than in the UK as a whole, with 19% citing the issue compared to 29% nationwide. Input price pressures had more of an impact, with annual cost inflation slightly higher than the national average, although this is expected to drop over the next 12 months.
Melanie Christie, ICAEW director for the regions, said: “It’s pleasing to see that business confidence in the North East has increased to the fourth quarter in a row and is higher than the UK average. However, despite reporting strong domestic and export sales growth, businesses in the North East continue to face a range of challenges.
“To boost confidence, the UK Government should use the upcoming Budget as an opportunity to conduct an urgent review of the UK’s tax system and introduce reforms to stimulate economic growth, build confidence and drive investment.”
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