Businesses in the South West are confident about their prospects for the next year despite the sharpest fall in sales since ICAEW began its Business Confidence Monitor (BCM) survey in 2004, the latest report from the chartered accountancy body has found.
Meanwhile, the South West’s large hospitality sector suffered from ongoing restrictions, which led to many businesses either cutting back operations or closing entirely.
The BCM for Q1 2021 found that business confidence in the South West is back in positive territory, likely a result of news of coronavirus vaccines which are expected to bring a return to more normal business conditions.
The pandemic has continued to cause difficulties for businesses in the region. Domestic sales fell by 2.0% year-on year, the biggest drop since the survey began in 2004. Exports held up better over the last year, likely boosted by a temporary rush to ship goods early, to avoid trade disruption caused by the end of the Brexit transition period.
Meanwhile, the South West’s large hospitality sector suffered from ongoing restrictions, which led to many businesses either cutting back operations or closing entirely.
Challenges facing business
Just over a third of those surveyed reported that customer demand was a growing challenge. Late payments were a growing challenge for just over a fifth of the region’s businesses.
Transport issues were a growing problem for 17% of businesses. Parts of the South West are geographically isolated, and this may have seen the region more exposed to problems with transport during the pandemic.
Looking ahead
Companies in the South West forecast domestic sales to increase by 3.7% and exports by 2.0%, with profits expected to rise 3.2% as a result, assuming the vaccine rollouts bring a return to more normal trading conditions.
Employment is set to rise by 1.5%, after companies cut their headcounts by 0.7% in the year to Q1 2021.
Beverley Waters, ICAEW Regional Director for the South West, said, “The pandemic has created very difficult conditions for businesses in the South West, causing the sharpest fall in domestic sales since we began asking businesses about their financial performance. Businesses still face challenges but are feeling more confident about the future.
“We want to see the Budget focus on providing a bridge to sustainable and resilient economic recovery, getting people back into work, helping exporters, and greater investment in digital technology to make our businesses competitive in the 21st Century.”
