A professional business body is calling on the government to "restore confidence" to businesses in South West as firms continue to struggle with rising costs and late payments.
The Institute of Chartered Accountants in England and Wales (ICAEW) has released new data that reveals business confidence in the region has continued to weaken despite companies reporting healthier sales performances.
According to the ICAEW, South West firms are facing difficulties with staff turnover, late payments and a sharp rise in costs, even though the outlook for sales and exports is among the strongest in the UK.
The region has seen a 5.6% increase in domestic sales year on year, while exports sales have grown by 4.8%. In the next 12 months, these figures are projected to be 4.3% and 4.7% respectively, the ICAEW said.
Despite this, labour market challenges have had a “marked impact” on business confidence in the region, while staff turnover, which is nearly twice the historical average for the South West at 36%, is also posing problems. Some 15% of firms in the region also flagged availability of government support as a challenge.
“On Thursday (November 17) the government must outline a plan to restore confidence, generate environmentally sustainable long-term economic growth and bring opportunity and prosperity to our left-behind communities and regions," said Beverley Waters, ICAEW South West regional director.
The ICAEW also said further targeted support would be needed to help businesses "grappling" with the ongoing cost-of-living crisis when energy support schemes end in April.
Average total salaries in the region have grown by 3.5% in the past 12 months, according to the ICAEW, with a further rise of 3.9% expected in the year ahead. The industry body said the wage rise was reflected in the quickly expanding workforce, with staff levels increasing 2.8% year on year and a further rise of 2.6% expected in 2023.
Capital investment has also grown by 2.5% in the year to the fourth quarter 2022, while research and development budgets rose by 2.3%. However, the outlook for the next year is more subdued, with greater uncertainty about economic conditions and a projected rise of 1.5% and 2.1% respectively.
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