BUSINESS leaders in the East of England remain optimistic about their growth opportunities for the year ahead, despite gloomy economic forecasts.
The findings by the latest Business Outlook Tracker produced by business advice firm Grant Thornton indicate that businesses are confident they can weather the economic downturn.
Revenue growth expectations have risen by 37 percentage points since October. Optimism for the economy is up by 35pc and profit growth expectations have increased by 17pc in the past six months.
The study shows that funding confidence is greater by 39pc and more than half of those surveyed are confident that they have sufficient working capital to manage the impact of a recession for six months or more.
James Brown pictured, partner and Grant Thornton’s practice leader in the East of England, said: “It is surprising that the market’s positivity levels are at odds with the forecasts from the Bank of England and the government. Optimism levels have rebounded significantly since October, when the shock and uncertainty from the mini-Budget plummeted mid-market optimism to some of the lowest recorded in our Tracker. The certainty provided since seems to have reassured the market.”
The main concerns for the region’s mid-market heading into 2023 are winter blackouts, geopolitical tensions and the rising tax burden. However, most sufficiently prepared to manage challenges that come their way. The mid-market continues to struggle to attract and retain talent, with 65pc of respondents experiencing unusually high attrition rates. 60pc are also struggling to recruit for open roles.
But employers are pulling out all the stops to remain competitive. Just under three quarters intend to offer their staff a pay rise in line with or above inflation, while 90pc are also reviewing their employee benefits package to make it more competitive.
Almost half (46pc) are planning to invest more in skills development over the next six months.
“Even though we know the economy and operating conditions are not likely to improve much in the short term, it is perhaps better to have bad news over uncertainty,” said Mr Brown. “Certainty over the future allows businesses to work this into their forecasts and take action to soften the impact.
“While a potential recession is often in the headlines, our survey shows that the labour market remains a concern. Employers are trying to improve efficiency and productivity while also managing cost levels, which is demonstrated by high investments in technology and people. It is interesting to note the focus on skills development, which shows a commitment to making staff more efficient as well as a desire to manage retention levels and costs.
The research also found that the mid-market is starting to look for ways to reduce its reliance on people. Two out of three employers are increasing their use of automation and digital.
“Having seen at first hand how our region responded to the challenges of recent years with determination, flexibility, enterprise and innovation, I am confident that businesses in the East of England will find a way to survive and thrive during the months ahead,” Mr Brown said. “Given the encouragingly high optimism levels, it would seem that the local market shares this confidence.”