Business confidence in the East of England is now at its highest level since Q2 2005 with a Confidence Index score of 7.6 for Q3 2009 up by a record 39.5 points since the last survey, according to the latest Institute of Chartered Accountants UK Business Confidence Monitor (BCM).
The figures show a rising Confidence Index for the third successive quarter.
[Pictured during a visit to Marshall of Cambridge, left to right: Tim Howes, President of the East Anglian Society of Chartered Accountants and Centre Manager for Kaplan East Anglia; Michael Izza, Chief Executive, Institute of Chartered Accountants; Bill Dastur, Marshall of Cambridge; Pippa Bourne, Regional Director, Institute of Chartered Accountants.]
Firms surveyed for the BCM in the East of England expected turnover to increase by 3.1% over the next 12 months, having shrunk by 1.9% over the previous 12 months.
This is the highest expected rate of growth in turnover since Q3 2008 and highlights a significant improvement in outlook compared with recent BCM surveys. In Q2 2009 the region’s business professionals expected turnover to contract by 1.2% over the year ahead. This change in expectations is strong evidence of a turnaround in business outlook in the East of England.
East of England firms also have a more positive outlook for both profits and sales than at any point since this time last year. Profits are forecast to grow by 2.8% over the next 12 months following a fall of 1.9% over the last 12 months, while sales growth is expected at 2.8% following a decline of 1.5% over the 12 months to date.
Despite expected wage growth of 1.1% over the next 12 months, the fastest pace in England and Wales, firms in the East of England expect no increase in prices over the coming year, even though wages typically make up around 60% of total business costs. This is the first time in the history of BCM that firms in the region have forecast zero annual growth in prices, and it follows the sharpest annual decline in prices (‑0.6%) ever recorded in the region.
The increase in confidence is reflected in East of England firms’ expectations for stronger than average growth in sales over the coming 12 months, with 2.8% forecast compared with 2.3% for the UK as a whole. The region’s relatively strong exports growth over the last 12 months (2.6%) is also expected to be maintained over the coming 12 months.
Said Pippa Bourne, Regional Director of the ICAEW in the East of England: “This quarter’s BCM suggests that the recession in the East of England is nearing the end. While there is no doubt that the region’s economy is on its way to recovery, we shouldn’t underestimate the challenges ahead for businesses. Businesses have taken the right actions to mitigate the impact of the downturn and are playing their part in an improving economy. Policies such as quantitative easing, the fall in interest rates and the VAT reduction have all helped improve business confidence. However, the recovery is very fragile and although positive growth in the autumn seems more likely, there are still concerns about the strength of the recovery.”
The BCM is one of the largest and most comprehensive quarterly trackers of business confidence in the UK, based on the informed opinions of typically 1,000 senior business professionals working at the heart of business. It has proved to be an accurate forward indicator of GDP growth.
To access the survey in full go to www.icaew.com/bcm and for information on surviving the downturn www.icaew.com/creditcrunch.
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