North West business confidence takes a dive ahead of EU referendum

Confidence among North West businesses during Q2 2016 has seen a sharp decline following a gradual dip in optimism over the past three quarters.

The latest ICAEW/Grant Thornton Business Confidence Monitor has found that this month’s EU referendum, along with various economic challenges, has caused the region’s business community to adopt a gloomier outlook.

Since April this year, North West firms showed a confidence score of +3.3, down from +28.3 in Q3 2015.

Domestic sales growth, meanwhile, slowed from 5.7% this time last year to just 2.3%.

Further, well over a third of businesses (40%) said that marketplace competition is a bigger issue now than it was a year ago. Around a quarter (24%) reported that the availability of management and non-management skills is a greater problem than in 2015.

ICAEW’s regional director for the North West, Melanie Christie, said: “Business confidence in the North West has taken a plunge for the third successive quarter.

“It is likely that worsening of financial performance, which has been apparent over the last year across the region is impacting business sentiment.”

She continued: “Furthermore, wider uncertainties are likely to stem from the upcoming EU referendum.

“Business confidence in the region is fragile and the next quarter could be decisive in terms of a return to a trend for growth and the economy going forward.”

Grant Thornton’s North West managing partner, Carl Williams, explained that while the latest Confidence Monitor “does not make for happy reading” at a glance, the findings should come as no surprise given the proximity of the EU referendum and the uncertainty it has created in both regional and national markets.

He commented: “Aside from the referendum I believe the fundamentals of the region’s economy are robust. In the next month the North West is going to be hosting the second International Festival for Business in Liverpool – which is an outstanding opportunity for all of us to exploit to grow our networks.”

Speaking further, Mr Williams said another big boost for the region was the recent launch of direct flights connecting Manchester with Beijing.

He continued: “The road to sustained economic growth is never a smooth one and there will always be bumps in the road.

“In the long term I am confident in the prospects for the North West, particularly given the political agenda which recognises that significant investment is needed in infrastructure and transport.”