Member Article

Gloomy forecasts dampen mood for region’s business leaders

With gloomy economic forecasts, business leaders in the North West are pessimistic about their growth opportunities for the year ahead.

According to data from Grant Thornton UK LLP’s latest Business Outlook Tracker*, mid-market optimism has decreased across many of the indicators monitored:

Economic optimism has dropped –2 percentage points (pp) since October

Optimism regarding their business’ funding position has fallen by –4pp since October

Profit growth expectations are also diving – decreasing –12pp since October

 

However, despite a general feeling of pessimism, over half (65%) are also confident that they have sufficient working capital to manage the impact of a recession for six months or more.

The North West mid-market continues to struggle to attract and retain talent, with 64% of respondents experiencing unusually high attrition rates. Over half (55%) are also struggling to recruit for open roles.

Employers are pulling out all the stops in a bid to remain competitive. Over half of respondents (56%) are planning to offer their people a pay rise in line with, or above, inflation, while 81% are also reviewing their employee benefits package to make it more competitive. Almost half (45%) are also planning to invest more in skills development over the next six months.

The research also finds that North West businesses are starting to look for ways to reduce their reliance on people. Almost three quarters (66%) agree that they are increasing their use of automation and digital.

Carl Williams, Managing Partner for the North West Grant Thornton UK LLP, said:

  

“We assumed that a likely recession would lead to a more fluid labour market and we still expect unemployment to increase in 2023 and 2024 to more normal levels. This should start to ease the pressure off salaries and turn the balance of power back towards employers. Anecdotally, we are already starting to see signs of this, with more employers asking their people to come into the office more frequently.

 

“But with the UK in the midst of numerous strikes around pay and working conditions, how far these demands are met could have a knock-on effect for the mid-market and place further salary growth pressures on employers.

“That said, having seen first-hand how the North West region was able to respond to the challenges of recent years, with resilience determination, flexibility, enterprise and innovation, I am confident that many businesses in our region will find a way to survive and thrive during the months ahead and they’ll be more optimistic as we progress throughout 2023.”

This was posted in Bdaily's Members' News section by John Robson .