ALMOST three-quarters of companies in the North-east are staffing up for growth amid signs that the economy is returning to prosperity.
More than half of companies (58%) located in Aberdeen and Aberdeenshire expect their turnover to grow over the next 12 months, fuelled by demand from overseas.
To meet the opportunity, 71% are looking to grow their workforce, 12-percentage points ahead of the UK average (59%).
The North-east Quarterly Economic Survey (QES), launched today by Aberdeen & Grampian Chamber of Commerce, in partnership with law firm Gilson Gray LLP, benchmarks key indicators in the region’s economy against the wider UK.
Established in 1989, QES is the UK’s longest running and largest independent business confidence survey and is referred to by governments, their agencies and the Bank of England.
The survey shows:
- 48% of businesses in the region are concerned about high taxes, compared with just 36% in the rest of the UK;
- 45% of companies in the region expect price of their goods or services to increase in the next three months; and
- Domestic orders continue to slide for North-east companies, but international demand is soaring ahead of the UK average (39% of North-east companies are seeing international orders increase, versus 28% nationally).
However, there are still some headwinds facing companies in the North-east, where the pressure from higher staffing and utility costs continues to squeeze margins.
Nationally, the survey shows 38% of firms (compared with 36% in Q1) said they had seen an increase in domestic sales over the previous three months, while 43% reported no change, and 20% a decrease.
After a static picture in Q1, business confidence has increased slightly in Q2. 58% of firms say they are expecting an increase in turnover over the next year compared with 56% in Q1. 29% expect no change and only 13% expect a decrease.
With inflation easing to target – the data also reveals that fewer firms (39% compared to 46% in Q1) expect to hike their own prices in the coming months.
Russell Borthwick, Chief Executive of Aberdeen & Grampian Chamber of Commerce, said: “We have written to the new Prime Minister in the hope that his government can provide the much-needed economic stability that will create the conditions for business to thrive in every part of the UK; but selfishly our focus is very much on supporting our members and the wider North-east community.
“We need the PM to deliver on his commitment to forge a new partnership with business to boost growth and to work with his government to ensure that Aberdeen & Grampian is in pole position to deliver an energy transition that secures investment, jobs and creates the opportunities everyone covets in the clean industries of the future.
“We need a business environment that encourages enterprise, start-ups, scale-ups and sustainable multi-sector growth. The pressures of business taxes and spiralling costs has stretched many firms to breaking point over recent years and we are hopeful of an improved partnership between our UK, Scottish and local governments in seeking to address this – and a range of other matters – in a meaningful way.”
Findlay Anderson, Partner at Gilson Gray LLP, said: “Whilst domestic sales performance in the North-east has lagged the UK during the last quarter, export performance has increased with 39% of local businesses seeing improvement during the quarter versus 28% elsewhere in the UK.
“This export potential appears to be a key factor in the 58% of local companies who are projecting growth over the coming 12 months. The North-east continues to be an export powerhouse in the UK and our governments must support this region’s industries to thrive in a period when we all (governments included) need to see performance rebounding.”
Shevaun Haviland, Director General of the British Chambers of Commerce said: “It’s really encouraging to see positive shoots of recovery from businesses across the UK.
“Confidence has been improving among companies in recent months. Our data show the tangible impact of that positivity, as businesses report improved sales and cashflow. But investment levels remain an area of concern.
“Our message to the new Government is clear. We need a long-term economic plan that has the green transition at its heart, with a workforce fit for the future, living in thriving local places and powered by businesses that are globally facing and digitally enabled.
“Business stands ready to work in partnership with Government to capitalise on the positive signs our data is showing.”