A review of the local economy by Steven Law
Vice President of The Association of Business Recovery Professionals (R3) and Ensors Business Recovery partner.
Recently published economic data indicates that the recession may be coming to an end. Whilst the Gross Domestic Product for the UK for the most recent quarter remained in negative territory, other countries in continental Europe have officially come out of recession. Economists believe that the UK will follow later this year or early in 2010.
Although the number of business closures continues to increase and the unemployment count looks likely to continue to rise for a few months yet, there are positive signs that UK business confidence is rising. The Institute of Chartered Accountants (ICAEW) has recently published its Business Confidence Monitor for Q3 2009, which sees the confidence of UK business managers in positive territory for the first time in two years (see graph below).
This survey is significant as it demonstrates that managers are expecting an increase in turnover and net profit for the year ahead.
Our region projected the third highest rate of business confidence in England (behind the South West and Northern England) in the ICAEW survey and was nearly double the average for the country. I believe this strong outcome is due to the diverse mix of the eastern region economy. Agriculture and related industries have ridden the recession well and there have been good trading conditions in the insurance and tourism sectors, both of which feature significantly in our region.
Our region is also home to many small businesses of 10 to 49 employees. These featured best, compared to businesses of other sizes in the ICAEW survey with a confidence rating of positive 13 (compared with minus 31 in the last quarter). Small businesses are the lifeblood of the eastern region and it is encouraging to see them moving forward again.
Of course, it is a well-known fact that more businesses fail coming out of recession than whilst in recession. The main reason for this is the difficulty in obtaining and managing finances when the business needs to expand, coupled with the risk of failure of key customers. For this reason, I anticipate that the Business Recovery team at Ensors will remain busy for some time to come and I recommend our clients remain vigilant when building for recovery.
