The financial health of West Midland firms continues to improve but confidence remains fragile, according to a new survey.
According to the latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM), businesses in the West Midlands saw a return to positive turnover and gross profit growth in Q3 2010.
Turnover increased by 1.3 per cent in the year to Q3 2010 while gross profits rose by 1.6 per cent.
Turnover is expected to grow by 4.6 per cent over the next year, while gross profits are forecast to rise by 3.9 per cent, according to the figures.
Vipul Sheth, President of the Birmingham and West Midlands Society of Chartered Accountants, said: “Businesses in the West Midlands who came through the recession are now facing the challenge of surviving the recovery.
“They still don’t know what the future holds and are uncertain about how the mood of fiscal austerity will impact the economic recovery.
“Government needs to deliver on its commitment to ensure Britain is open for business while taking the tough decisions required to tackle the deficit.”
For employees in the West Midlands, average total salaries grew only marginally (0.1 per cent) over the year to Q3 2010, although this is the first time growth has been recorded since Q2 2009.
Total salaries are forecast to rise by 1.3 per cent over the next 12 months.
This is still below pre-recession rates and the current rate of inflation, implying that consumer spending power will remain squeezed over the next year.
Bank charges remain an issue for West Midlands firms with nearly one in three (29 per cent) reporting bank charges to be a greater challenge to business performance than 12 months ago.
The proportion reporting this trend in the West Midlands is also greater than in any other region.
This quarter, nearly one in five (19 per cent) of West Midlands firms report access to capital to be a greater challenge than 12 months ago. The picture is considerably more positive than in Q3 2009, when over half (54 per cent) reported this trend.
Dave Munton, office managing partner at Grant Thornton in Birmingham, added: “It is encouraging to see regional businesses reporting a modest increase in turnover and gross profit during the last quarter, which indicates an improving level of confidence and general corporate activity.
“However, the ongoing need to exercise rigorous control over cash flows and costs remains, plus there is increasing uncertainty surrounding the impact of public sector cuts on the private sector.”