Despite gloomy economic forecasts, business leaders in the East Midlands are optimistic about their growth opportunities for the year ahead.
According to data from Grant Thornton UK LLP’s latest Business Outlook Tracker, mid-market optimism in the East Midlands has rebounded across all indicators monitored:
- Revenue growth expectations have risen +36 percentage points (pp) since October
- Profit growth expectations are rising – increasing +24pp since October
- Economic optimism has risen +22pp since October
The results indicate that businesses are confident they can weather this economic downturn. Optimism regarding their funding position has risen +20pp since October. Almost three quarters (74%) are also confident that they have sufficient working capital to manage the impact of a recession for six months or more.
The top concerns for the region’s mid-market heading into 2023 are the rising tax burden and wage increases, both of which they feel sufficiently prepared to manage.
The mid-market continues to struggle to attract and retain talent, with 64% of respondents experiencing unusually high attrition rates. Over half (62%) are also struggling to recruit for open roles.
Employers are pulling out all the stops in a bid to remain competitive. Over three quarters of respondents (84%) are planning to offer their people a pay rise in line with, or above, inflation, while 76% are also reviewing their employee benefits package to make it more competitive. Almost half (44%) are also planning to invest more in skills development over the next six months.
The research also finds that the mid-market is starting to look for ways to reduce its reliance on people. Over three quarters (76%) agree that they are increasing their use of automation and digital.
James Brown, partner and practice leader at Grant Thornton UK LLP, said: “The market’s positivity levels are surprisingly at odds with the forecasts from the Bank of England and the government. Optimism levels have rebounded significantly since the shock and uncertainty from October’s mini-Budget plummeted mid-market optimism to some of the lowest recorded in our Tracker.
“The certainty provided since last October seems to have reassured the market. Even though we know the economy is not likely to significantly improve anytime soon, it is perhaps better to know what is happening even if the news is bad rather than grappling with surprises that can’t be planned for.
“While a potential recession seems to be looming, our survey shows that the labour market remains a concern. Employers are trying to improve efficiency and productivity, while also managing cost levels, which is demonstrated by high investments in technology and people.
“Having seen first-hand how our region responded to the challenges of recent years with determination, agility, enterprise and innovation, I am confident that businesses in the East Midlands will find a way to survive and thrive during the months ahead. Given the encouragingly high optimism levels, it would seem that the local market shares this confidence in its prospects for 2023.”
