The ICAEW in conjunction with Grant Thorntan produces quarterly Business Confidence Monitor (BCM) reports.
BCM is one of the largest and most comprehensive quarterly reviews of UK business confidence providing a snapshot of the economy. The recent report, ‘Q2 2011’, is based on 1000 telephone interviews conducted 1 February – 21 April 2011, with ICAEW members working in industry and commerce.
Overall the report for Q2 2011 shows that business confidence is improving, although it’s still lower than this time last year. Promisingly, it shows “turnover and profit growth are at their strongest since Q3 2008, while growth expectations are at their highest since before the recession”.
Unfortunately confidence in the Service sector is flat and even more disappointingly, confidence in London and the South East weakened, whilst the rest of the UK strengthened.
The key factors influencing business confidence include; low customer demand, late payments, and lack of credit. No surprises there.
At the recent Brighton & Hove Chamber of Commerce lunch with guest speaker Professor David Miles from the Monetary Policy Committee, there was hopeful optimism. However, a very clear message came across; ‘Businesses are still feeling the effects of the recession’.
There was also a resounding ‘No’ to suggestions of raising interest rates to counteract inflation.
Professor Miles, raised some important points. Many of the current inflationary pressures are temporary; commodity prices, exchange rate movements, and VAT rises. It’s the permanent inflationary pressures which are best addressed by increasing interest rates.
A key permanent inflationary pressure is wage increases. But as a few businesses pointed out, no one would put their head above the parapet to ask for a pay rise for fear of losing their job.
I came away feeling hopeful interest rates would remain at 0.5% for 2011. But that could be wishful thinking…..
So how confident do I feel about the future for small businesses?
As an Accountant I get a privileged insight into my clients businesses and industry and I also network with many small businesses in Brighton & Hove.
I get an overwhelming sense that everyone has spare capacity, and I don’t think that has changed in the last 12 months. But I also see how businesses have evolved and have become even more supportive of each other, especially local businesses. I’ve also been pleased that many businesses have not dropped their environmental and/or ethical values in these tough times.
It’s this support and ability to evolve that makes me confident that small businesses in our city will grow. However, it is still an uphill struggle at times, and I’d like to see our new Council step up to the mark to improve the Brighton brand and support our small businesses.
I’ll be going to the Chamber’s State of the City event to take part in the debate. If you’re a small business then don’t miss this opportunity to help shape and influence the support we get from the Council.
So what would your answer be to the ICAEW question:
“Overall, how would you describe your confidence in the economic prospects facing your business over the next 12 months, compared to the previous 12 months?
- Much More Confident,
- Slightly More Confident,
- As Confident,
- Slightly Less Confident; or,
- Much Less Confident?”