Cautious optimism among businesses amidst a challenging economic environment.

Anonymous Author Business West
24 October 2024

Released today, Business West’s Q3 2024 Quarterly Economic Survey reveals cautious optimism among businesses in the South West, with confidence levels holding steady despite a challenging economic environment. The survey shows business confidence at a resilient net balance of 35%, while confidence in the UK economy has seen modest improvement, rising to a net balance of -12% from -21% in the previous quarter. However, ongoing concerns around workforce skills shortages, profitability, and economic uncertainty persist. This quarter’s report also sheds light on businesses' progress toward Net Zero, highlighting both awareness and the need for further action.

Business West’s Q3 Quarterly Economic Survey (QES), which polled 292 businesses across the South West, reveals that businesses confidence remains resilient, with a net balance of 35%, although this has slightly declined (by 4%) from Q2 2024. This means that over half (58%) of those surveyed feel confident about their business’s prospects. Confidence in the UK economy shows a modest improvement, with a net balance of -12%, up from -21% in the previous quarter.

Other key findings

  • Recruitment activity has remained steady, with 46% of businesses seeking new staff. However, 60% reported difficulties in finding suitable candidates, particularly for skilled and managerial roles
  • 71% percent of respondents reported no change in their prices over the past three months. However, it is important to note that a significant portion (25%) increased their prices, while only a small minority (4%) reduced them.
  • The domestic market returned to negative territory in Q3 2024, with a net balance of -1% for UK sales.
  • International sales also experienced a decline, with a net balance of -4%, reflecting global challenges.
  • General economic conditions and business uncertainty remain the top concerns, with 67% and 49% of businesses respectively
  • Profitability forecasts are moderately optimistic, with 42% expecting improvement, but they lag behind turnover expectations

This quarter’s report also had a special focus on Net Zero. A substantial majority (70%) of respondents recognise climate change as a significant issue. However, a notable gap persists between awareness and action. While 70% acknowledge the environmental challenge, only 32% have taken the crucial step of measuring their carbon footprint.

To further accelerate climate action, businesses expressed a need for additional support. Tax incentives were the most sought-after measure, with 49% of respondents requesting them.

Gustavo Guntren, Policy Analyst at Business West, said “This is our first QES since the general election. While we’ve seen confidence in the UK economy increase modestly since then, concerns about general economic conditions and business uncertainty persist. It remains to be seen if next week’s budget will provide our businesses the reassurance they need.”

Quotes from local businesses:

"I have to balance reduced income with the risk that increasing my prices will contribute to an overall loss of profit.  However, my current prices doom my business to losing money - based on current demand, so I feel I have no choice but to raise prices and hope for the best." Beatrice Pounder, Proprietor, The Duchess in Bath 

“I think the uncertainty of what the next budget holds and the direction we are going will have an effect on business confidence.” John Mayer, Excel Accountants Ltd, North Somerset