News Article
North East businesses are forecasting a mixed six months ahead with rising energy costs giving cause for concern, a new report reveals today.
But, while general business optimism is muted, North East firms are more confident that domestic orders will rise substantially over the next year allied to a modest increase in employment.
The Regional Survey of UK Economic Trends – commissioned by One North East and the CBI – takes a six month economic health check from companies across the region, looking at past performance and at the challenges that lie ahead in the coming year.
There are expectations of an increase in business output over the next 12 months and the region is more likely to use North East ports and airports for transport of sales and purchases than any other region in England and Scotland.
Alan Clarke, One North East Chief Executive, said: “One North East is working hard with business to tackle the issues they face, such as rising energy costs through a programme to boost their bottom line by cutting carbon emissions.
“This report has also identified other challenges which we are addressing as a regional development agency by working more closely with key organisations, such as the CBI, and by greater engagement with the business community in general.”
Sarah Green, CBI Director for the North East, said: “This survey reinforces the anecdotal evidence we hear from businesses. Increased energy costs have been particularly tough for this region due to the fact that the North East has a higher proportion of manufacturers.
“Transport and skills are the key areas holding back businesses within the region and CBI North East will be working at a national level to lobby for more flexibility – both in funding and on policy interpretation – to ensure that Government guidelines do not inhibit growth within our region.
“The survey does also highlight a number of positives, such as companies in the North East being more likely to work in close collaboration with universities.
“This is an area we need to build as innovation and R & D are critical to our future growth. My greatest concern from this survey is the lack of optimism regarding investment prospects.
“If businesses do not continue to invest for their future, it will be very difficult for them or the regional economy to succeed.”
The survey of 136 companies – carried out by researchers Experian Business Strategies – revealed a mixed picture for the region.
Overall, North East firms surveyed are pessimistic about the general business climate over the next six months.
North East companies have experienced no change in output over the past year with falling levels of employment and profit margins over the past 12 months.
A total of 86% of firms surveyed in the North East said spiralling energy costs would continue to pressurise their business in the next six months.
Companies were asked about the perceived barriers to growth with North East firms, 20% in total, the most likely to cite an inadequate transport infrastructure as a hindrance as well as 26% of firms reporting skills problems as a barrier.
The majority of companies in England and Scotland feel that overall travel and transport costs will increase as a result of any national road pricing initiative, with a balance of 23% of North East firms forecasting a fall in their overall volume of sales in the wake of the introduction of such a scheme.
The North East was the least optimistic region regarding future investment in buildings, plant and machinery as well as product and process innovation.
But businesses in the North East and North West are more likely than any other region to belong to special industrial networks to boost trade opportunities and the North East stands as second only to East Midlands in its research and development links between business and universities. The study also found that 16% of regional firms make the majority of their sales overseas, the largest percentage in England and Scotland.
The North East statistics form part of a national survey broken down by regions. It is the seventh UK Survey of Regional Economic Trends conducted by Experian Business Strategies on behalf of the CBI, all English Regional Development Agencies and Scottish Enterprise.
Ends.
For further information please contact:
Gordon Arnott, Senior Press Officer, One North East.
Tel:(0191) 229 6309 Fax:(0191) 229 6234 Mobile: 07713 317883
e-mail: gordon.arnott@onenortheast.co.uk
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