Lancashire Times
Weekend Edition
4:00 AM 23rd November 2021

Confidence Remains High Among Northern Businesses With Investment Welcome

Confidence among businesses in Northern England remains high, a new report has found, likely shored up by announcements of investment in the region from Nissan and Britishvolt.

ICAEW’s Business Confidence Monitor for Q4 2021, released today (Tuesday 23 November 2021), found sentiment among the region’s companies remained in positive territory, although it had slipped from its record high in the previous quarter.

The high sentiment was likely related to predictions of continued growth in sales over the next 12 months and forthcoming investment from big employers in the region, ICAEW said.

Companies in Northern England forecast domestic sales growth of 4.7%, and export growth of 3.1%, over the next 12 months, the latter particularly encouraging given the region’s reliance on exports. In the year to Q4 2021, domestic sales grew 0.8%, while exports grew 1.3% in the same period.

Headcounts have also started to increase, following a decline, and were up by 1.5% year-on-year, with a further 1.4% rise forecast.

Accordingly, salaries are set to increase by 1.7% in the next year, which would mark a return to pre-pandemic growth and which demonstrates some of the hiring difficulties that the region’s companies are facing.

A third of companies said finding staff with the right non-management skills was an increasing challenge, higher than the historical average. A slightly higher proportion of companies said staff turnover was a growing source of difficulty.

Meanwhile, transport issues were a growing problem for three in 10 companies, the highest rate in a decade. This was a likely reflection of problems with freight capacity, a shortage of HGV drivers, and post-Brexit trading rules.

As with other UK regions, companies in Northern England have also been dealing with rising costs. Input prices increased by 2.6% in the year to Q4 2021, and are forecast to rise by a further 2.2% in the next 12 months as companies cope with supply chain problems. Consequently, selling prices are set to increase by 1.9% as costs are passed on to customers.

Nationally business confidence weakened after hitting record-breaking levels in the previous two quarters. This fall in optimism likely reflected problems businesses have experienced, both at home and abroad, from rising costs, supply chain disruptions and recruitment challenges.

Dr James Callaghan, ICAEW Regional Director for Northern England, said: “News of investment in our region by Nissan and Britishvolt was an extra shot in the arm for business confidence, following growth after a tough start to the year caused by the pandemic.

“Businesses in Northern England forecast strong growth and sales, both at home and abroad, as we look to 2022.

“However, challenges persist from rising costs, higher energy prices and the forthcoming increase in National Insurance. As companies in the region continue to bounce back from a challenging year, it’s vital nothing else derails this recovery.”