Business Confidence Soars Into Positive Territory Amid Strong Sales

Business confidence in Yorkshire and the Humber has soared into positive territory and is now higher than in any other UK region or nation, a new survey has found.

Chartered accountancy body ICAEW’s Business Confidence Monitor put sentiment in the region at 26.1 for Q1 2024, a marked increase from the previous quarter when the index was in negative territory. Not only was this the biggest improvement anywhere in the UK, sentiment comfortably outstripped the national reading.

The boost in confidence was most likely a result of strong domestic sales growth year-on-year, ICAEW said, in contrast to some other regions of the UK. Additionally, businesses are optimistic that sales will grow further over the next year, in line with the national average.

Input price inflation eased further in the year to Q1, and this trend is expected to continue in the year ahead. Consequently, the region’s firms have slowed the rate by which they are increasing their prices, and this is also set to continue.

Accordingly, profit expectations have been bolstered and growth is predicted to outstrip the national figure and the historical norm in the next 12 months.

As set out in a series of recommendations made to all political parties ahead of the upcoming General Election, the Institute has called for a new vision for a prosperous and productive UK economy that supports businesses in the next parliament.

Dr James Callaghan, ICAEW Regional Director for Yorkshire and the Humber, said:

“It’s positive news for businesses in Yorkshire and the Humber who report their confidence to be higher than anywhere else in the country, particularly given that sentiment was negative at the end of 2023.

“Our businesses report that domestic sales and profits are set to grow in the next year, further underlining the strong confidence reading.

“The UK economy is less resilient than it should be, leaving it vulnerable to shocks and less agile to embracing innovation. Building an economy with resilience at its core, an end to weak productivity and making the UK the best place to run a business, must be among the next government’s top priorities.”

Export growth was weak in comparison to other nations and regions, but is expected to significantly improve in the next year, further supporting the strong confidence reading.

The region’s companies continued to report facing a number of growing challenges, with two-fifths of businesses citing regulatory requirements as a concern, ICAEW said.

A third of businesses reported customer demand as a growing challenge, a decline on the previous quarter. A similar number of businesses said that marketplace competition was a pressing issue, more of a concern in Yorkshire and the Humber than in any other region.

Salaries in Yorkshire and the Humber increased ahead of both the historical average for the region and the national average, the report found, with further increases also set to outpace the UK. The availability of non-management skills is elevated as a growing concern, cited by a quarter of businesses in Q1 and ahead of the historical average, another possible reason for the salary growth reading alongside wider inflationary pressures.

Overall, employment in the region is forecast to increase in the next year, outpacing the national average. Meanwhile, capital investment growth – which had been strong compared to most other regions and nations – is set to slow.

Nationally, business confidence more than tripled to 14.4 on the index, surpassing the pre-pandemic average for the first time in two years, as economic conditions improved. The boost was likely underpinned by positive sales and exports projections for the next 12 months, ICAEW said.