Despite gloomy economic forecasts, business leaders in Yorkshire 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 Yorkshire has rebounded across all indicators monitored:
- Economic optimism has risen +28 percentage points (pp) since October
- Revenue growth expectations have risen +42pp since October
- Profit growth expectations are rising – increasing +54pp since October
The results indicate that businesses are confident they can weather this economic downturn. Optimism regarding their funding position has risen +44pp since October. Over two thirds (68%) 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 Yorkshire mid-market heading into 2023 are rising interest rates, potential winter blackouts and difficulty accessing finance, all of which they feel sufficiently prepared to manage.
The mid-market continues to struggle to attract and retain talent, with 58% of respondents experiencing unusually high attrition rates. Over half (58%) are also struggling to recruit for open roles.
But employers in Yorkshire are pulling out all the stops in a bid to remain competitive. Over three quarters of respondents (76%) are planning to offer their people a pay rise in line with, or above, inflation, while 82% are also reviewing their employee benefits package to make it more competitive. Just under half (46%) 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 (86%) agree that they are increasing their use of automation and digital.
Andy Wood, Yorkshire Managing Partner, Grant Thornton UK LLP, said:
“It is surprising that the levels of positivity in the mid-market are at odds with the current forecasts from the Bank of England and the government. Optimism levels have rebounded significantly since October, when the shock and uncertainty resulting from the mini-Budget plummeted mid-market optimism to some of the lowest recorded in our Tracker. The certainty provided since seems to have reassured the market.
“Even though we know the economy and operating conditions are not likely to improve any time soon, it is perhaps better to have bad news over uncertainty. Certainty over the future allows businesses to work this into their forecasts and take action to soften the impact.
“While a potential recession is often the headline issue, 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 both technology and people. It is interesting to note the focus on skills development, which shows a commitment to making staff more efficient as well as a desire to manage retention levels and costs.
“Having seen first-hand how our region was able to respond to the challenges of recent years, with determination, flexibility, enterprise and innovation, I am confident that many Yorkshire businesses will find a way to survive and thrive during the months ahead – their optimism is encouraging.”
