Confidence is growing as recovery gathers paceFeb 26, 2014
Turnover has grown by an average 4.1% in the last 12 months and the trend is expected to continue, says the report published by the Institute of Chartered Accountants in England and Wales and business advisers Grant Thornton UK.
The survey of 1,000 chartered accountants advising businesses reported that confidence in the region has been on a general upward trend since Q3 2012 and now stands at +29.0, well above the reading of +15.7 this time last year.
Despite that, confidence is below the UK national average of +37.2.
Businesses are predicting 4.3% turnover growth over the coming 12 months. Similarly, companies saw increases in gross profits and sales of 3.7%, with expectations of 4.1% and 4.3% growth, respectively, for the next year.
ICAEW East of England regional director Pippa Bourne said: “With businesses confident about their prospects over the next year, the regional economy is likely to expand steadily, reflecting the strengthening UK-wide recovery.
“However, we need to reinforce the drive to grow our exports, against a backdrop of a widening trade deficit, at the same time as ensuring momentum in the UK economy is maintained across all parts of the country.
“That is why, in his forward guidance, the Governor of the Bank of England had to look at broader measures such as capacity or investment growth – not just employment.”
Growth looks set to be increasingly driven by domestic demand, with UK demand set to increase faster than exports over the coming year. Companies in the region saw domestic sales increase by 3.3% last year, compared to export growth of 3.9% for the same period.
However, over the coming year this trend is set to be reversed, with domestic sales accelerating, with growth of 3.9% as opposed to 3% for exports.
Kevin Gale, practice leader of Grant Thornton in Milton Keynes, said: “Another sign of rising confidence in the region is the growth in employment. An increase of 1.7% is much stronger than was seen 12 months ago. Unemployment has fallen in the region and businesses project a further increase in headcount in the year ahead.
“This positive sign does bring its own challenges with 21% reporting an increase in staff turnover over the past 12 months. Increased competition in attracting and retaining the best employees is likely to create a rise in wages at a time when it is essential to keep a tight rein on costs."