Businesses in the East Midlands continue to project to make profit over the next year but are currently investing less in machinery and training, says a study into business experience in the region.
East Midlands Chamber’s Quarterly Economic Survey is a key indicator of challenges and opportunities faced by businesses across multiple sectors, highlighting their concerns and the level of confidence they have for the months ahead.
Key takeaways from respondents in East Midlands Chamber’s Quarterly Economic Survey Q3, 2024:
- 2% growth in the workforce over the last three months
- 1/4 expect their workforce to increase over the next 3 months
- 7/10 had problems recruiting suitable staff over the last 3 months
- Half expect profitability to improve over the next year
- 7/10 expect to keep prices the same over the next three months
- UK Orders increased by 3%, UK Sales decreased by 5% over the last quarter
East Midlands Chamber Director of Policy and Insight Richard Blackmore said: “A varied picture that I’d describe as ‘cautious optimism’ can be taken from this Quarterly Economic Survey where, on one hand it’s great to be seeing lots of confidence from businesses that they expect to be profitable over the next year – half the respondents reported that – but, at the same time businesses are hesitant to spend, having pulled back on investment in machinery and training.
“While expectations of increasing profitability are an encouraging indicator, especially as the figure has risen slightly this quarter, turnover confidence fell slightly, suggesting there’s concern from businesses over revenue prospects and market pressure. Seeing reduced investment in machinery, which has fallen by 13% and training investment down 5% suggests businesses are feeling a need to protect their cash flow at the moment, amid economic uncertainties.
“UK orders are up but, in contrast, sales within the UK are down 5%. A UK sales fall suggests a slight slowdown in domestic demand, likely due to caution among consumers facing the pressure of inflation, but it’s comforting that a sense of optimism among domestic clients appears to be driving up UK orders, which are 3% higher this quarter.
“Overseas trading is proving a challenge where the survey shows a 10% drop, with factors like exchange rate fluctuation or geopolitical issues likely playing a part. To manage the difficulties there’s a need for businesses to diversify their export strategies and adapt to changing global market conditions.
“On recruitment, the survey’s findings reveal a brighter picture with businesses hiring. The East Midlands workforce grew 2% in the last quarter, but while a quarter of businesses said they expect to recruit staff in the next three months, seven out of ten said they’ve had problems getting the right staff. It’s one thing to intend to recruit, but another to get the right candidate. That further underlines the skills gap among applicants and something the government should address by announcing investment in the upcoming Autumn Statement.
“Within the context of the high cost of doing business and major political change, the mixed outlook we’ve seen in this Quarterly Economic Survey isn’t too surprising, with a trend toward reduced investment being consistent with the idea that businesses are conserving their cash flow. As we fast approach the Autumn Budget, I would urge the new government to do all they can to support businesses.
“Our Budget Submission to the UK Government outlines six asks that would grow the East Midlands economy, including investment into skills, which is essential so that businesses can get a candidate that has the abilities they need and can hit the ground running. It’s telling that, with a budget announcement on the horizon, among the concerns businesses said they have right now, top of the list was corporate taxation. The Budget Submission lays out how reforming business rates, revising the VAT threshold and announcing investment into transport and infrastructure would enable growth in the East Midlands.“
View the full Quarterly Economic Survey for Q3, 2024 here.
