Study shows businesses are confident

Businesses in the West Midlands are some of the most confident in the country for their prospects for the year ahead, a new survey has found.

Chartered accountancy body ICAEW’s Business Confidence Monitor (BCM) for Q1 2022, found sentiment among the region’s businesses to be in firmly positive territory at 35.8, putting the West Midlands and London in pole position as the most confident parts of the UK. Nationally, confidence stands at 27.6 on the tracker.

Businesses in the West Midlands reported that sales had grown by 7% in the past 12 months, the highest rate of growth in the UK, and forecast sales would rise by 7.4% in the next year.

Companies in the region expect their profits to grow by 6.1% in the next 12 months, a higher rate than the national average of 5.4%.

And prices are set to increase by 3.2% in the next year, which is the biggest projected increase for any UK region and which would also be a joint record for the West Midlands.

But at 1.5%, export growth year-on-year was more muted, possibly because of the impact of the pandemic on international markets and Brexit. Businesses in the West Midlands expect exports to grow at a faster pace, although this is lower than the UK average.

More than a third of companies in the West Midlands cited both the availability of non-management skills and staff turnover as growing challenges. The rates of both are well above the region’s historical averages.[4]

Employee numbers are set to increase by 3.1% in the next year, which would be a near-record increase, the report found.

And the number of companies for whom transport problems were a growing challenge was, at 34%, more than double the historical average for the West Midlands. This is likely because of complex supply-chain relationships and staff shortages, as well as Brexit disruption.

Businesses in the region were increasing salaries to tackle recruitment and staff retention problems, ICAEW said. Salaries increased 1.7% year-on-year, and are set to grow by a further 3% in the next 12 months.

Justin Kyriakou, ICAEW regional director for the North West and Midlands, said: “Nearly two years since the start of the pandemic, confidence among businesses in the West Midlands is returning to normal levels after unprecedented highs. Companies in our region tell us they face staffing challenges but nevertheless expect growth and profits to increase in the next 12 months, and the West Midlands remains one of the most confident regions for businesses in the UK.

“As companies look to the future, the Government’s plans for levelling up the country could help deepen the post-pandemic economic recovery, and we hope engagement with the private sector can play a key role in achieving growth.”