Businesses in the Thames Valley are bouncing back better than firms in other regions of the UK, according to the findings of a survey published today (Thursday).
Thames Valley Chamber of Commerce – an umbrella organisations for chambers along the Thames Valley, including Swindon – published, for the first time, the finding of its own members' contributions to the influential British Chambers of Commerce Quarterly Economic Survey, which helps inform decisions made by Government, the Bank of England, the IMF, and others.
The findings of the survey – a snapshot of business performance and confidence – were published alongside a webinar, at which experts from the British Chambers of Commerce and accountancy and business advisory firm BDO helped turn raw data into meaningful information.
Businesses in the Thames Valley painted a slightly rosier picture of their condition than the national average, but – as David Bharier, head of research at the British Chambers of Commerce, pointed out – the region's economy is stacked with professional services firms which found it easier to adopt online trading and home working than regions whose businesses depend heavily on manufacturing or hospitality.
"They were able to weather the storm better than others and work around Covid restrictions," he said.
The good news, both regionally and nationally, is that firms are feeling a lot more confident about increasing their domestic sales. At the start of the pandemic, 73 percent nationally were betting on a decrease in sales, with a further 17 percent anticipating no change.
The picture improved slightly throughout 2020, but bounced back in the first quarter of 2021, when 44 percent of UK firms said they anticipated an increase in domestic sales. And in the Thames Valley, that proportion stood at nearly half (49 percent).
Export sales were not looking so rosy. Twenty-three percent of businesses had seen an increase in overseas sales, and 22 an increase in overseas orders.
Panellists pointed to the confusion surrounding Britain's departure from the European Union, which suddenly made exporting to the continent much more difficult and costly.
With 46 percent of Thames Valley businesses running at full capacity, experts wondered whether some – especially the smaller firms – had decided to concentrate on the domestic market rather than posting or shipping goods to our continental neighbours.
In further positive news, Thames Valley businesses told QES pollsters that over the next 12 months 79 percent expect turnover to improve – 10 percent more than the national average – and 65 percent expect their profitability to improve – albeit from a lower than pre-pandemic levels base.
Thirty-nine percent reported an increase in cashflow, and 28 percent said they were ready to invest and grow – 28 percent said investment in plant and machinery had increased, while 36 percent said investment in training had increased.
In good news for jobs, more than half (53 percent) were recruiting, and three-quarters of those roles were permanent, full-time jobs. But 45 percent were finding it difficult to recruit.
Thirty-one percent of respondents saw their workforce increase over the period, while 45 percent think their workforce will increase.
The top three concerns facing business owners were competition (27 percent), inflation (22 percent) and taxation (20 percent).
David Bharier said the cost of raw materials was a primary driver of inflation, but that wage pressures would play a part to – especially in industries facing a recruitment crisis caused by Covid and Brexit.
Those increased costs would naturally be passed down the chain to the end-consumer.
The UK, he said, was in 'new territory' with the closing and subsequent reopening of the economy causing a shortage of supply versus demand.
Mario Amato, head of group business development at White & Company removals and storage, added some context: the cost of freight had spiralled (the cost of filling a 40 ft shipping container had jumped from $3,000 to $12,000 – while the UK faced a shortage of lorry drivers, with many returning to Eastern Europe because of Brexit and Covid.
David Brooks of BDO reckoned that some inflation was temporary, but other inflationary factors would stick. Wage inflation, he suggested, was a human behaviour issue with many people – especially those in low-paid employment – looking for new, better-paying jobs.
Both Davids agreed that many businesses had borrowed money to see them through the pandemic. The last thing they wanted, he said, is for repayment interest rates to start climbing.
Taxation, added David Brooks, was also a concern for businesses. The Office for Budget Responsibility suggests the government needs to 'find' £10 billion a year for the next three years to replenish its empty coffers – "a significant amount of tax" that is more likely to fall on businesses than households.
Polling for the next Quarterly Economic Survey begins on August 23. The Thames Valley Chamber of Commerce / BDO QES Q3 seminar will be held on October 13.