BUSINESS CONFIDENCE DEBATE
PRESENT: Richard Slater
Lancashire Business View (Chair) Chris Brown
Brown & Co and ICAEW Lancashire and South Lakeland
Hamish Hamilton Vistage International
Justin Kyriakou ICAEW Lancashire and South Lakeland
Neil McMillan McMillan & Co
Carl Meyler Rowan Group
Karen Musgrave RSM
Amin Vepari Lancashire County Council
Mike Ward Victrex
How confident are businesses compared to previous times when they’ve had to face extraordinary difficulties?
CB: Confidence is down. Businesses are concerned but I don’t think there’s a state of panic. Those with growth plans are still going ahead, they’re a little more hesitant perhaps, the plans have slowed down a little bit, but they’ve certainly not stopped.
When it comes to investment plans, we’ve seen businesses diversifying. They have been doing that throughout the pandemic.
Businesses are now used to having to manage all these changes that are coming in quick fire succession. We’ve found businesses are looking for people to have a positive viewpoint. Because there is so much negativity in the news, they need that positive force behind them to help drive forward.
KM: Businesses that have come through tough times, through Brexit, through Covid, they’re pretty resilient. They’re planning well ahead, better than ever.
Those that are planning well, forecasting well, they know what the sensitivities are in their business but they’re looking forward. They might be having pause for thought before diving in and investing but they’re not stopping.
Our corporate finance team has seen quite a lot of activity recently and that reflects the fact there is still some confidence out there and businesses
that are willing to invest and move forward.
NM: Forecasting is fundamental but there’s not a great deal of certainty about input costs. Energy prices make planning particularly difficult. It can be quite challenging to exude confidence.
I’m seeing businesses raring to go, order books are pretty full. But it’s that continual browbeating around input costs or energy, wage price inflation, shortage of labour in every sector and the shortage of key inputs into manufacturing processes.
If something could be done with the supply side and there was a bit more certainty, the underlying fundamentals should deliver some really positive news. The various government U-turns aren’t helping with consistency.
HH: Mindset is absolutely huge. Chief executives of SMEs are more confident than press reports, but they want certainty. Uncertainty is the biggest killer of business confidence.
If you look at the data, what is inflation? Inflation is a way of allocating scarce resources, so effectively it’s because the economy’s overheating. A recent statistic showed unemployment down at 3.5 per cent, so yes there might be a technical recession, in terms of normal economic rebalancing, but it doesn’t mean it’s going to be Armageddon.
One of the biggest challenges is employment and the wage crisis. We’ve seen tight employment and the wage rises we’ve witnessed are going to feed into the economy.
We haven’t got the labour supply to match the growth that is wanted. That is going to be the constraint and we’ve just got to innovate our way out of it.
AV: The businesses that are growing and scaling are carrying on doing so but are fully aware of the limitations. If you don’t have the people, the access to people or the relevant skills, that’s going to limit your growth.
It is not that businesses aren’t prepared to do it, they’re being realistic. There is a lot of uncertainty and maybe you don’t just press the button yet.
MW: We are an exporter competing on a global scale. We manufacture everything in the UK so we’re experiencing problems that our customers and competitors aren’t necessarily experiencing on a global basis. Yes, there’s utility inflation in a lot of geographies but certainly not all of them.
It’s the same with labour and other issues. Exchange rates have moved massively. It is trying not to be distracted by what is going on in the UK while also considering what is going on globally and what that means for the competitive position of UK businesses.
We’re confident in the fundamentals of our business and what we can bring to our customers, that hasn’t changed. In terms of the volatility and the timing of getting from A to B, it will probably take us slightly longer than it would have done previously.
Continued on page 32
LANCASHIREBUSINESSVIEW.CO.UK IN ASSOCIATION WITH: NAVIGATING CHOPPY WATERS
With the Institute of Chartered Accountants in England and Wales (ICAEW) Lancashire and South Lakeland, our expert panel came together to discuss business confidence and how companies in all sectors can meet the many and growing challenges they are now facing
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