West of England LEP Barriers to Growth Survey Report. Quarter

Transcription

1 West of England LEP Barriers to Growth Survey Report Quarter July 213

2 About Welcome to this Barriers to Growth survey report summarising the findings of a business survey undertaken throughout the second quarter of 213, on behalf of the West of England Local Enterprise Partnership (LEP). The primary focus of the survey is to identify what the immediate barriers to growth are for local business. The principle aim of the survey is to identify immediate business priorities, so that the West of England LEP can consider what practical action can be taken to improve the business environment. In order to monitor both quarterly and annual trends, two survey types have been adopted, a short quarterly survey undertaken in business quarters 2, 3 and 4, and a longer annual survey undertaken during the first business quarter. These surveys are distributed amongst members of the four leading business membership organisations engaged with the West of England LEP: Business West, the Institute of Directors (IoD), Federation of Small Business (FSB) and Confederation of British Industry (CBI). The second quarter barriers survey was undertaken throughout May and June 213. The results of this survey form the basis of this short report. Contents Respondent Profile Page 3 Results Summary Page 3 Orders and Sales Summary Page 4 Export Summary Page 4 Exports and Markets Page 5 Business Issues Page 6 Workforce Page 7 Costs and Finance Page 8 Living Wage Page 9 National Picture Page 9 July 213 2

3 Respondent West of England Profile Advantages & Disadvantages Repondents Number of Employees In which industry does your business mainly operate? Professional Services 25 Other Services 8 Tourism 8 Construction and Development 8 The West of England LEP Barriers to Growth survey, for the second quarter of 213, received a total of 221 responses from businesses across the LEP area, the highest number of responses to date. This is an increase on the last quarter as the Quarter survey gained 142 responses. Respondents were surveyed over the period 2 th of May to 12 th of June 213. Results Summary Respondents reporting an increase Change on Quarter Change on Year Indicator Q2 213 (Q1 213) (Q2 212) UK sales UK orders Export sales Export orders Current workforce Future workforce Business confidence Cashflow July 213 3

4 Orders and Sales Summary UK Sales Q4 212 Q1 213 Q2 213 Increased Remained constant Decreased There has been a marked uplift in the number of respondents reporting an increase in their UK sales over the past three months. As 51of respondents reported an increase in this measure, up 9, compared to last quarter. This has been matched by a similar growth in those reporting an increase in their UK orders. This measure has risen 11 to 47 of respondents UK Orders Q4 212 Q1 213 Q2 213 Increased Remained constant Decreased As the graphs opposite show, there has been a gradual increase in both these measure so far this year. These figures indicate that improving levels of confidence in the UK economy as a whole are being reflected in the sales and orders of businesses in the West of England LEP area. After extremely poor trading in 212, we appear to be returning to normal conditions. Barriers to Growth survey respondent Export Summary Export Status The export status of respondents has remained constant compared to last quarter, with 27 of businesses currently exporting. Not Exporting 65 Currently Exporting 27 Considering Exporting 8 This shows a much stronger exporting drive in the West of England LEP area than the South West region as a whole. As in the South west as a whole only around 6 of businesses export. Our UK business is stagnant and we are relying on new overseas business to maintain our turnover. Barriers to Growth survey respondent July 213 4

5 Exports and Markets 1 Export Sales 1 Export Orders Q4 212 Q1 213 Q2 213 Increased Remained constant Decreased Q4 212 Q1 213 Q2 213 Increased Remained constant Decreased As the charts above show, there has been a gradual rise in the levels of respondents reporting an increase in both export sales and export orders. Over a third (38) of businesses this quarter reported that their export sales had increased over the past three months. This is a 12 rise when compared to the last quarter and a dramatic 2 increase on the same time last year. The number of businesses reporting growth in their export orders has largely remained constant when mapped against the previous quarter. There has, however, been a 21 climb compared to the same period last year. Australia and New Zealand Central and South America USA Africa BRIC Countries (Brazil, Russia, India, China) Export Markets Middle East Asia Other Europe EU Members Potential Future Growth Currently Exporting To These increases indicate more companies looking abroad for opportunities for growth. The largest current export markets, for businesses in the West of England, are the more traditional ones, with 8 of exporters currently exporting to the EU and 47 to the USA. Exporters are also exploring newer markets with 39 currently exporting to BRIC countries (Brazil, Russia, India and China) and 25 currently exporting to Africa. In terms of future growth, exporters still view the more traditional markets of the EU and the USA as offering the largest potential opportunities. They are, however, open to exploring emerging markets in Central and South America and Asia. July 213 5

6 Business Issues Other, please specify: No Obstacles Exporting opportunitiets Taxation/NI/VAT/Rates Lack of Demand Lack Management Time Planning Process Transportation and Connectivity Cost/ Availability of premises Finance Availability Labour market skills Employment legislation Broadband Connectivity Biggest Barrier to Growth Q2 213 Q The most crucial issues to businesses ability to grow are a lack of demand and a lack of management time. These issues have been of prevalent concern for the past year. This indicates that although businesses are concerned by inadequate custom, they are also too stretched to explore areas of potential future growth. This lack of demand is echoed in other measures, as 64 of businesses are currently working at below capacity. Competition has remained the issue of most concern to businesses when compared to three months ago. Inflation also has increased as an area of concern when compared to the start of the year. The inflation figures for May, released by the ONS, showed that Annual Consumer Price Inflation was 2.7 in the year to May 213, up from 2.4 in April and the Annual Retail Price Index was 3.1 up from 2.9. These increases have an effect on both consumer spending and confidence levels and potentially act as an increasing barrier to business growth in the future. Issues of more concern than 3 months ago Interest Rates Inflation Business Rates Exchange Rates Competition Taxation Q1 213 Q2 213 July 213 6

7 Workforce Types of Job Recruited For Q1 213 Q2 213 New Postions Existing Positions Both New and Existing Positons Workforce (Past 3 Months) 7 There was a dip in businesses recruitment at the start of the year, when compared to the end of 212, however it has largely bounced back over the past quarter. Over a third of businesses, (35) reported that they had added to their workforce over the past three months. There has also been a positive comparison to last quarter, in the amount of businesses expecting their workforce to increase in the future. The measure has risen 6, to 35 of respondents. In terms of future employment, 35 of respondents are expecting to increase their workforce over the next three months. Showing a gradually positive trend as this is an increase of 6 compared last quarter s results. This indicates that local trends are mirroring national ones. As the latest ONS figures, from June, show the national employment rate of 71.5 largely remaining constant when compared to the start of the year. The number of businesses recruiting for new positions, as opposed to replacing staff turnover, is showing a positive development. As 45 of recruitment in the past three months has been for new positions, a rise of 1 on the last quarter. It was not all positive however, as over half (53) of those who had taken on staff in the past three months experienced difficulties. 1 of respondents this quarter reported a lack of skills in the labor market as their biggest barrier to business growth. This indicates that there are potential weaknesses in the local labor market that are detrimentally affecting businesses ability to expand. Workforce Intentions (Next 3 Months) Q4 212 Q1 213 Q2 213 Increased Remained constant Decreased Q4 212 Q1 213 Q2 213 Increased Remained constant Decrease July 213 7

8 Cost and Finance Avalibility of Finance (Past 3 Months) Improved Remained the same Q1 213 Q2 213 Business Confidence (Next Year) Neutral 19 Negative/ Very Very Negative Confident 7 15 Confident 59 Deteriorated Availability of finance has remained an issue of concern to businesses in the West of England so far this year. With 14 of businesses viewing a lack of available finance as their biggest barrier to growth. There has been a worrying increase, when compared to the start of the year, in the number of businesses reporting that their access to finance has deteriorated over the past three months. Despite this, businesses in the West of England have maintained largely brilliant business relationships with their banks. With 53 citing that they have either a very good or good relationship. These issues have also not effected optimism in the future, with 64 of respondents confident about their businesses prospects over the coming year. There has also been some retraction in terms of businesses capacity from the end of 213. A perturbing two thirds of respondents in the West of England are working below capacity Operating At Q2 212 Q3 212 Q4 212 Q1 213 Q2 213 Full Capacity Below Capacity Banks are still not engaging in lending conversations. We are being ever more creative with venture funding and private investment Barriers to Growth survey respondent July 213 8

9 Living Wage Are you aware of the Living Wage Campaign? No 29 Yes 71 The Living Wage Campaign is based on the following principle - every worker in the country to earn enough to provide their family with the essentials of life. The current National Minimum Wage (NMW) is 6.19 and the Living Wage outside of London is calculated at Living Wage employers have found benefits in increased staff retention rates and quality of work and reduced absenteeism, but many sign up because "it is the right thing to do". Would you sign your business up to become a living wage employer? Yes No Don t Know I am already a Living Wage employer National Overview The second official estimate of economic growth (GDP) for Q1 213 was unrevised at.3. However, the rise in GDP was better than expected. Year-onyear, the UK economy grew by.6, just a quarter of the average annual growth rate for the past 2 years. A breakdown of the data revealed a slight rise in consumer spending, while business investment fell and the UK's trade balance also deteriorated. (Data Source:ONS) The latest labour market data suggests that the UK jobs market is weakening. In the three months to March, UK unemployment rose by 15, to reach 2.52 million, while the number of people in employment fell by 43, over the same period. Significantly, average earnings increased by just.4 in the year to March, the lowest rate of growth since 29. However, a positive sign is that the total number claiming Jobseekers' Allowance fell by 7,3. July 213 9

10 About Working on behalf of our members and the wider business community, the Business West policy team represents and lobbies on the issues that matter for local businesses. Driven by our six priority themes, our publications aim to keep business informed about issues of importance. Policy Themes Transport & Connectivity Planning & Development Economy & Business Growth Employment & Skills Energy & Environment Local & National Government Business West Leigh Court, Abbots Leigh, Bristol,BS8 3RA T E.