West Midland firms are forecasting growth to continue into the New Year after a positive end to the current year.

Businesses in the region are reporting improved financial performance over 2010, according to the latest Institute of Chartered Accountants in England and Wales(ICAEW)/Grant Thornton UK Business Confidence Monitor.

Profit and turnover growth are in positive territory for the second consecutive quarter after six quarters of decline.

Turnover increased by 2.4 per cent in the year to the fourth quarter of 2010, from 1.3 per cent over the year to the third quarter.

Gross profit increased by 2.1 per cent over the year to the fourth quarter 2010, up from 1.6 per cent last quarter.

Exports are also increasing solidly, growing by 3.7 per cent – the highest rate of growth since the first quarter of 2009.

And over the coming 12 months businesses in the West Midlands expect exports to increase by 4.6 per cent, also up from the previous quarter.

Nigel Hastilow, ICAEW’s West Midlands regional director, said: “It is hoped that business optimism revealed in this survey will be justified by performance throughout 2011.

“I am particularly pleased to learn that export growth is currently high in the West Midlands.

“The prospect of a boost from international sales will be welcomed in the manufacturing sector.

“At the same time, over half of firms in the region report customer demand as a greater challenge to performance than a year ago.

“West Midlands business leaders are not taking recovery for granted and the impact on demand of public sector cuts and tax increases next year means economic prospects remain uncertain.”

Dave Munton, office managing partner at Grant Thornton in Birmingham, added: “2011 will undoubtedly be another difficult year for West Midland companies, with forecasts currently softening on the back of expectations of reduced consumer spending.

“However, businesses are still predicting that exports, turnover and profits will be higher over the next four quarters than in 2010 overall.

“Businesses are now used to dealing with difficult conditions and will continue to review their own prospects in terms of financing, order books and opportunities.

“There are many dynamic companies in the region, including exporters buoyed by the relative weakness of sterling, looking to invest in their long-term futures.”