• Swindon & Wiltshire Economy
• Thursday October 12 2023
• Author Name: Peter Davison

Quarterly Economic Survey: South West businesses are cautiously optimistic, while adapting to uncertain times – Business West

The Quarterly Economic Survey (QES) from Business West, which polls businesses across the South West, reveals over half (57 per cent) of the 332 respondents express confidence in their own business’s prospects for the next 12 months.

However, half of the participants hold pessimistic views about the national economic outlook over the next year.

The survey reveals a complex landscape for businesses characterised by persistent challenges. These include labour market tightness, rising costs, and overall business uncertainty.

Yet, despite these challenges, easing inflationary pressures and a modest upturn in domestic sales provide reasons for cautious optimism.

Matt Griffith, director of policy at Business West, said: “As the next election begins to loom on the horizon, this survey offers some local business insights that all parties would be wise to listen to.

“Businesses in our area are cautiously optimistic about the year ahead, yet there is a clear need for greater certainty, and also support when it comes to recruitment, working with our local skills system and reaching net zero.

These businesses appear to have accepted that uncertainty is the new status quo and are doing their best to adapt accordingly.

“This report is testament to the resilience of our local economy and business people, but is also a warning against complacency and the need for a sustained approach to driving economic improvement from local and national government.”

Other key statistics include:

Labour Costs: Labour costs remain a significant source of inflationary pressure, reported by 62v of respondents. Filling vacancies remains a challenge, with 71 per cent encountering recruitment obstacles.

Net Zero: the level of climate awareness within the business community has remained consistently high, with 69 per cent of respondents recognising climate change as a significant issue. Tax incentives and increased access to funding and finance were selected by 40 per cent of participant businesses as the most needed forms of support to reduce their environmental impact.

Improvement in Sales: The net balances for UK sales and orders have improved compared to Q2 (-2 per cent and -6 per cent in Q3 compared to -12 per cent for both in Q2). Domestic sales net balance in the services sector returned to positive territory in Q3 (2 per cent).

Export Sales: Export sales remain in negative territory but experienced a slight improvement compared to Q2’s results (-18 per cent in Q2 to -11 per cent in Q3).

Overseas Markets: The main overseas markets for survey respondents continue to be Europe (89 per cent), North America (58 per cent), and Australasia (42 per cent).

Concerns and Priorities: General economic conditions remain the primary area of worry for 66 per cent of respondents (down from 69 per cent in Q2), followed by general business uncertainty (53 per cent) and inflation (51 per cent – a notable decrease from 60 per cent in the previous quarter).

Profit Outlook: A significant number of survey respondents (40 per cent) anticipate an improvement in their profits over the next twelve months, signalling a more positive outlook than in previous quarters.

Latest: A third of businesses in the West of England are optimistic about their own business prospects over the next three months – but less than a quarter are confident about the state of the UK economy at large.