Business confidence in the South East is at its highest level since 2010 and is positive for the first time since Q2 2012 according to the latest ICAEW/Grant Thornton Business Confidence Monitor (BCM). The BCM Confidence Index score of +17.5 for the South East, compared to the national average of +12.8, ranks the region as one of the most optimistic for the year ahead.
Companies expect continued export growth, rising this quarter by 4.1% compared to the same period last year. This follows the general upward trend for the region over the past four quarters from 2.7% annual growth in Q1 2012. Promisingly, companies are expecting this strong performance to continue over the next 12 months, predicting export growth of a further 4.9%.
Andrea Dunhill, incoming ICAEW London and South East regional director, said: “At nearly £43 billion a year, the South East sends more goods overseas than anywhere else in the UK. With export growth in the South East above the national average – where there was also slight growth – the robust performance will strengthen hopes that an export-led recovery, vital for the future strength of the national economy, could be beginning.”
Employment levels across the region have increased by 1.5% over the past year, and businesses expect staffing levels to increase by a further 2.0% over the next year. Despite this, pay growth is predicted to stay modest at 1.8% compared to 1.7% over the previous 12 months.
Norman Armstrong, partner at Grant Thornton in Southampton, commented: “As the heartland of British exports, the steadily-growing confidence in the South East region represents not only a ‘glimmer of hope’ for the local economy, but also for that of the wider British economy. Rising employment levels, increased turnover projections, declining insolvency rates and other metrics help substantiate the fact that the optimism shown by businesses in the region is grounded in the reality of a more favourable economic climate – particularly for those businesses that have expanded their footprints in foreign markets over the past few years.”
Concerns over customer demands have also continued to fall with only 39% of companies seeing them as a greater challenge, down from 50% in Q2 of 2012. Businesses also expect turnover to increase by 6.1% and sales volume to grow by 6.0%, up from 5.2% and 4.9% respectively.
The latest findings of the BCM accurately reflect Experian’s Insolvencies Index, which shows the number of business failures in the region in 2012 declined by 4.8% from 2011. This gives the South East the joint smallest proportion of businesses failing anywhere in the country.