Car sector woes hit Midlands' business confidence
Mar 11 2009 by Tom Scotney, Birmingham Post
Business confidence in the West Midlands plunged to a record low over the past three months because of the turmoil in the automotive sector, according to a survey from the Institute of Chartered Accountants in England and Wales.
After rising marginally in the last quarterly survey, confidence plummeted by 24.2 points this quarter and now stands at 11.7 points below the UK average.
Fears over the car industry’s future and its extensive supply-chain businesses are likely to be closely linked to the steep drop in confidence in the region, the ICAEW said.
Business professionals in the West Midlands said they expected steeper contractions in turnover, profits and sales than those in other regions. Turnover is expected to shrink by 3.9 per cent over the next 12 months following a contraction of 0.7 per cent over the year to date. Likewise, profits are expected to fall by 3.5 per cent, having shrunk by 2.2 per cent over the previous year.
Businesses in the West Midlands said they expected to cut key budgets over the coming year. Research and development budgets are expected to shrink by an average of 2.5 per cent while staff development budgets will be reduced by 3.1 per cent. The number of staff employed by firms in the West Midlands is expected to be cut by an average of 2.3 per cent, more than twice as quickly as the rate over the previous year.
Andeep Mangal, the president of the Birmingham and West Midlands Society of Chartered Accountants, said: “As our confidence monitor shows, businesses in the West Midlands don’t believe that this will be a short recession. A record reduction in capital investments added to the challenges of access to capital and late payments point to a difficult time ahead.”
The proportion of West Midlands professionals who report late payments from customers as a greater challenge to business performance than it was a year ago has increased to almost half, up from 28 per cent in the last quarterly survey and 18 per cent last year.
More than half of West Midlands firms said customer demand is now a greater challenge than a year ago, up from 39 per cent last quarter and 36 per cent last year, demonstrating the extent to which demand is suffering.
Almost a third of professionals in the West Midlands now report access to capital as a greater challenge than a year ago, up from 17 per cent last quarter and 12 per cent this time last year.
