John Fairbrother, office managing partner at Begbies Traynor in Liverpool, gives his view of what’s happening in the British economy
Business growth across the UK and the North West has seen a definite and welcome rise over the start of 2014, with numerous surveys painting a picture of slow but steady growth across a range of sectors.
The first quarter of the year saw the fastest expansion in business investment for two years, according to Office of National Statistics (ONS) figures, with business investment growing by 5% – almost double what had been expected. The ONS said business investment contributed 0.4% of the 0.8% economic growth in the first quarter, and UK economic growth of 3% was still the strongest since 2007.
The latest Begbies Traynor Red Flag Alert for Q1 2014, which monitors the financial health of “Corporate UK”, also revealed that levels of ‘Critical’ financial distress among UK businesses decreased by 7% year on year, from 3,283 in Q1 2013 to 3,063 in Q1 2014.
Building on the steady return of optimism over the past year, 2014 has seen a return of confidence to the economy, leading many firms to put into play expansion plans that they may have had on hold for some time.
With its strong heritage in manufacturing and international trade, the North West has seen an impressive resurgence of its economic fortunes. Its thriving media and service sector is also putting the region at the forefront of the wider economic recovery across the country.
This growth brings with it a range of opportunities for both SMEs and larger corporates to take advantage of the gathering economic momentum and look at new expansion opportunities at home and abroad.
The International Festival of Business 2014, currently being held in Liverpool, is a great way of showcasing the wealth of regional talent and highlighting the range of opportunities for growth, as well as sharing the range of support and guidance available from business support organisations such as UKTI, the local Chambers of Commerce and Local Enterprise Partnerships.
Many North West businesses have also used the recession as an opportunity to explore new export markets, as demand for British-made products remains strong overseas. Britain’s export of goods hit a record high in 2013 with December’s trade figures from the ONS revealing that the UK firms exported £304.3bn of goods last year; an increase of 1.3% from 2012. This will certainly have been a huge boost to overall GDP growth last year, with the balance between imports and exports also starting to move in the right direction. While Europe remains a key export market, the slower recovery of the Eurozone means that British firms should continue to target markets further afield.
However, North West businesses should also bear in mind the need for a responsible recovery, avoiding the understandable temptation to overtrade as prospects improve. While the return of confidence is welcome, it is also important to proceed with caution and build sustainable businesses on solid foundations rather than growing too quickly.
Despite the widespread misery caused by the recession, businesses across the North West may have actually benefited in some ways. Those firms that have made it through are now leaner, fitter and better equipped to compete both at home and overseas.
Similarly, the issue of so-called ‘zombie companies’, which are just surviving but have little prospect of making any real headway into paying off their debt, is also being addressed to ensure that they are either restructured to help them grow or wound down constructively. The removal of these firms from the marketplace not only reduces competition, but also frees up underused assets that can then be ‘recycled’ by other businesses.
It may yet take some time for the economy to truly reach a point when it can be described as flourishing, but having learnt lessons from the mistakes which led to the recession, firms will be able to rebuild on much more solid ground.
This places North West firms in an ideal position to take advantage of their workforces and facilities to seize new opportunities as markets continue to recover, and to ensure that future growth is fully sustainable.
Posted on 8th July 2014 by
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