Business confidence in the West Midlands has stabilised but remains below the levels recorded a year ago.
The latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM) indicates businesses have seen a steady level of growth across a range of financial indicators and expect this improvement to continue over the next year.
The BCM Confidence Index for the West Midlands in the second quarter stands at +23.8, down from +39.2 in the same period in 2014
Despite this, turnover increased by five per cent in the last 12 months and is expected to increase by a further five per cent in the year ahead
Salary growth in the region has improved by 2.2 per cent but the fall in inflation has led to earnings growth in real terms
As a result, businesses in the West Midlands expect domestic sales to grow by 5.5 per cent over the next 12 months
Tom Madden, ICAEW regional director for the Midlands, said: “The prolonged period of political and economic uncertainty has clearly had a material impact on business confidence in the last few months.
“With a clear majority, the incoming Government now has to move quickly to get the UK economy moving forward again.
“The first priority should be to grow our exports. The UK desperately needs to rebalance the economy.
“As the BCM reveals, the gap between our exports and domestic demand is widening even more.
“While growth built on domestic demand is fine for the moment, soon the benefits of low inflation and cheaper petrol will evaporate.
“It is crucial that we look to boost our exports both inside and outside the EU.
“Businesses need to think global from the start, and we need to make it easier for them to trade internationally.”
Dave Munton, regional managing partner at Grant Thornton, added: “Given the uncertainty surrounding the general election the dip in confidence is unsurprising.
“However, a major concern for ambitious businesses in the West Midlands is further economic uncertainty surrounding the UK’s position in the EU, which is a significant market for regional companies across many sectors.
“The EU Referendum Bill will start to provide clarity on the process and we believe that it will be extremely important for the views of dynamic mid-sized businesses, which are so vital to both the West Midlands and the UK economy, to be heard.
“Over the coming months Grant Thornton will continue its important work with this sector to help give these businesses a voice in the debate.”