12 bdo thames valley – business barometer
Business confidence declines in the latest Thames Valley Business Barometer survey
The Thames Valley Business Barometer is a twice yearly survey tracking trends in economic confidence and business performance across the region. Simon Brooker, BDO’s senior partner in the Thames Valley, takes a look at the latest results
As the Barometer enters its fifth year it does so against the backdrop of increasing uncertainty in the UK economy. On the face of it, the indicators are positive. Employment is up, interest and inflation have been low for some time and we have greater political stability than at any time this decade. Confidence in the UK economy should be high. However, indicators appear to tell a different story.
According to BDO’s national Business Trends Report for December 2015, business confidence in the future of the UK economy is hovering just above the long-term trend. The BDO Optimism Index – which predicts growth six months ahead – sits at its lowest level in over a year and while the Output Index – which reflects companies’ actual experience of orders for the coming three months – is higher, both are on a downward trend. The gap between businesses’ relatively strong expectations for the first quarter of 2016 and concerns for the six months ahead points to expectations of a continuing slowdown in the rate of economic growth this Spring.
The results from the latest Thames Valley Business Barometer survey – carried out during October and November 2015 – seem to support the national picture. The enormous surge in confidence witnessed among Thames Valley business leaders in 2014 has dropped over the past 18 months from a peak of 90% in Spring 2014 to 56% in the latest survey, while the percentage of businesses seeing an increase in turnover over the preceding six months has fallen from 82% to 65% over the same period.
Half of businesses surveyed had seen an increase in profitability, 58% had seen an increase in headcount, while three quarters of respondents expect their turnover to increase in the next six months. So why the mixed picture? Taken in isolation the indicators paint a positive picture, however every one of them is on a downward trend.
In December we discussed the survey
www.businessmag.co.uk Simon Brooker measuring results business barometer
The enormous surge in confidence witnessed among Thames Valley business leaders in 2014 has dropped over the past 18 months
results with local business leaders from the Thames Valley Business Barometer panel and asked them whether they felt that confidence had fallen. Many argued that times are good and what we might be seeing is a new norm forming after the recession; one where confidence is relatively high but is no longer increasing. Factors such as slowing growth in China, tensions in the Middle East, low global commodity prices and the possibility of a rise in UK interest rates are certainly influencing some businesses and may be causing a more cautious approach than we would otherwise see. The EU referendum appears to be of concern to many businesses, with the region in line to be particularly affected by any decision to leave the European Union with so many European headquarters here and such a high demand for skilled labour.
Flexible working
In this survey we looked at flexible working and found that 75% of those surveyed already operate a flexible working policy with a third of them in place for more than five years. Most businesses today must offer flexible
THE BUSINESS MAGAZINE – THAMES VALLEY – FEBRUARY 2016
working to some degree in order to attract and retain the right people. Indeed, improved staff retention was by far the main driver for introducing a flexible working policy and was the main benefit experienced by those with a policy in place.
While most businesses in the region already operate with a degree of flexibility, flexible working is about more than just flexibility in hours worked. Companies are increasingly incorporating flexibility into the workplace itself, changing the way in which office space is utilised and allowing them to reduce their operating costs. Technology plays a crucial part in enabling this. Indeed, young people entering the workplace today have been brought up with mobile technology and expect to be able to work from wherever they are and not be tied to a desk.
When we looked at the downsides of increasing flexibility the main issue by far concerned managing staff. With people moving away from working “nine to five” for five days a week and increasingly working away from the office, traditional management practices and ways of evaluating productivity and effectiveness must adapt too.
The Thames Valley Business Barometer is a collaboration between national accountancy and business advisory firm BDO LLP and marketing firm C8 Consulting, supported by a panel of local business leaders. For a copy of the full report, or to find out how you can get involved in future Barometer surveys, contact Simon Brooker.
Details:
simon.brooker@
bdo.co.uk
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