· West Midlands business confidence jumped to +46% from +17% in October – the largest increase seen by any region in the UK.
· UK headline index rebounds to highest level in a year (+43% in February), from record low of +18% in October 2022
· West Midlands business confidence notably higher than both European and global average
· UK employment outlook strengthens, with West Midlands leading the way on capex expectations
West Midlands business confidence rebounded in February and jumped to its highest level in over a year, according to the latest Accenture / S&P Global UK Business Outlook, as expectations towards future activity picked up sharply from a record low in October.
Having been at +17% in October, the new report shows that West Midlands business confidence has more than doubled to +46%, the largest increase seen by any UK region, as business leaders begin to look ahead with more optimism. This was mirrored by the national outlook which rose from +18% to +43%.
Other positive signs of resilience for the region were the profit (+19%) and employment (+27%) forecasts which increased from -7% and +15% respectively, falling in with the national average (+16% and +26%).
While predictions for capital expenditure and research & development plans nationally were less encouraging, the West Midlands showed signs of potential growth.
The net balance of firms in the West Midlands expecting an increase in capex spending stood at +19%, the highest in the country, increasing from 0% in October. This could represent a promising sign for growth as businesses in the region show a willingness to invest.
However, budgets remain tight in other areas, with firms in the region expect R&D spending to continue to fall (-3%).
Commenting on the findings, Paul Stanley, West Midlands lead for Accenture, said: “The businesses in the West Midlands continue to show resilience in the face of these challenging times and it’s encouraging that firms in our region are optimistic as we look to the future. This level of optimism needs to be maintained as businesses look to the long term, and a way of delivering this is through investment to ensure the business is well-equipped.
“Even as we continue to face uncertainties, including the cost-of-living crisis, a tight labour market and the current inflationary conditions, businesses should avoid the temptation of holding back on their spending plans. By acting boldly and bravely and investing in new technologies that will help reinvent their operations, businesses will be more likely to secure long term growth.”
The UK Outlook
UK business confidence stands at its highest level in 12 months. At +43%, the net balance of manufacturing and service sector firms expecting activity to increase over the next 12 months was the strongest recorded in a year, and marked a significant uptick from the +18% registered in October 2022.
UK companies were more confident than almost all of their European peers, with levels of optimism nearly double the average seen in the eurozone (+23%). Notably, business confidence on a global scale was also at its highest for a year (+32%), but remained lower than the UK average.
The boost to UK business expectations reflected growing confidence in nearly all of the 14 sectors covered by the survey, as firms predict a pick-up in customer demand and the easing of inflationary pressures. Hospitality firms registered positive sentiment for the first time in a year (+22%), with hopes that tighter budgets will lead households to spend on domestic “staycations” rather than holidays abroad.
With business activity and profit forecasts improving, UK businesses signalled greater optimism towards hiring in February. The net balance of firms predicting a rise in employment more than doubled to +26%, after hitting a two-year low of +11% last October. Firms suggested that labour shortages will continue to pose an issue, although the proportion of businesses confident of finding skilled staff jumped from 34% to 44% in February.