Things can only get better

A new CBI survey says that business confidence has risen in every English region and in Wales over the last six months as the global economic recovery has taken hold.

Business confidence has risen in every English region and in Wales over the last six months as the global economic recovery has taken hold. Between now and next summer output, domestic orders and employment are all expected to rise in every region.

Those are the key findings of a twice-yearly survey, published yesterday by the CBI and all the government’s regional development agencies(RDAs). Using over 3,500 responses, it examines the economies of each of the nine English regions, plus Wales.

Businesses in the East Midlands were the most optimistic about developments in the overall business situation over the next six months, while those in Wales were the least. But in every region the number of respondents expecting an improvement outweighed the number expecting a deterioration.

Also in every region the balance between those expecting things to get better and those expecting them to get worse was higher than in the previous survey. London and the East of England saw the mood swing particularly sharply since the spring.

Over the last year employment rose in every region except London, where it fell. Otherwise Wales saw the smallest increase in jobs while the strongest increases were in the North East and South West. Over the next year no region expected the number of people in work to fall. The East of England expected no change while every other region expected increases in employment. The biggest increases were anticipated in the North East and North West.

Output went up in every region over the last year and all expect that to continue. The biggest increases are expected in the South West and North West.

Domestic orders rose in every region except London but export orders were not as strong. They fell in four regions and barely grew at all in two more. Over the next year solid growth is expected everywhere in domestic orders but export orders will not grow as well. Only London and the South West expect strong export growth.

But firms still struggled to make profits over the last year. Profit margins fell in every region with the greatest falls in London and the North West. Over the year ahead firms in half the ten regions expect to be able to increase margins. East Midlands’ respondents had the highest expectations while those in the South West had the poorest.

Sir Graham Hall, Yorkshire Forward Chairman and lead RDA chairman for the CBI, said: ‘These results are encouraging. They show the national economy is rebounding from recent economic shocks and continuing global uncertainty. Over the last year, stability of interest and exchange rates and low unemployment have all helped to boost confidence.

‘But following the downturn, with unemployment still at a record low and the economy showing that an upturn is on the horizon, we can foresee recruitment problems for businesses next year. We need to invest now in training the current workforce to take full advantage of the opportunities the expected upturn will bring.’

Asked about factors contributing to their own competitiveness, firms said overwhelmingly that skills were the most important. But no region believed skills to be the main factor inhibiting growth in their region. Of the ten regions, six said inadequate government support was the key factor holding back growth. Attracting staff to the region was regarded as the most important constraint by the East Midlands and North West while housing costs dominated concerns in the South East.

In every region more than half the companies had paid for staff training in the last year. The highest proportions were in the South West where it was 75% and in the East of England at 74%.

Doug Godden, CBI Head of Economic Analysis, said : ‘The global recovery is now boosting the mood of firms in all parts of England and Wales, with rising orders at home and abroad ensuring that many companies expect to take on staff in the coming year. Even so conditions remain competitive. It’s clear that in many regions firms have little scope to put up prices and, almost everywhere, profits are expected to remain under severe pressure.’

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