Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
UK BUSINESS CONFIDENCE MONITOR REPORT Q3 2010 WALES INSPIRING CONFIDENCE icaew.com/bcm WALES IN Q3 2010 Confidence in Wales in line with UK average. Seventy senior business professionals in Wales were interviewed and record a Confidence Index score of 22.4 in the Q3 2010 ICAEW/Grant Thornton UK Business Confidence Monitor (BCM). The Welsh Confidence Index has weakened by a marginal 3.2 points this quarter and is now close to that of the UK as a whole. Nationally the Confidence Index stands at 21.5. BUSINESSES IN WALES REPORT STRONG GROWTH INVESTMENT AND R&D GROWTH REMAIN WEAK This quarter, Welsh businesses report stronger annual growth in key performance indicators than firms across the rest of the UK. Turnover rose 4.2% over the last year, while gross profits increased 3.6%, both notably above the UK averages of 1.6% and 1.7% respectively. In Wales, capital investment growth contracted by 0.5% in the 12 months to Q3 2010. This is marginally worse than in the UK as a whole, where annual capital investment growth was flat over the year. Growth in investment in research and development was also marginally behind the UK as a whole, at 0.2% compared to 0.8%. Expectations for turnover and profits over the next 12 months have also strengthened since last quarter, with turnover growth forecast to rise from 5.0% to 5.5%, and gross profits growth forecast to rise from 4.6% to 5.6%. This is also a more positive picture than for the UK as a whole, where expectations of future turnover and profits softened in Q3 2010. Robust annual growth in both exports and domestic sales is also reported this quarter in Wales. However there are high profile reports which are considerably less encouraging, notably the prospect of Welsh Language Channel S4C losing as much as 24% of its government grant over the next four years. Welsh businesses are expecting to increase their capital investment and research and development budgets over the coming year, with an expected increase of 2.0% and 1.1% respectively, broadly in line with forecasts for the UK as a whole (2.0% and 1.4%). Cuts to the Welsh Assembly Government Department for Economy and Transport, which provides grants for capital investment to businesses, could hinder investment plans in Wales. icaew.com/bcm EMPLOYMENT GROWTH RETURNS TO POSITIVE TERRITORY IN WALES FIG. 1 BCM CONFIDENCE INDEX TREND IN WALES 40 30 20 10 0 -10 -20 -30 Wales -40 UK Average -50 -60 Q3 Q4 2006 Q1 Q2 Q3 2007 Q4 Q1 Q2 2008 Q3 Q4 Q1 Q2 Q3 Q4 2009 CUSTOMER DEMAND LESS OF A CHALLENGE ACCESS TO CAPITAL ISSUES SUBSIDE IN WALES The proportion of Welsh businesses reporting customer demand to be a greater challenge to business performance than 12 months ago has fallen to under one third (28%) this quarter, down from 42% in Q2 2010 and 54% a year ago. This is the fifth consecutive quarterly decline in Wales. Nearly four in ten firms (37%) across the UK as a whole report this trend this quarter. This quarter, the proportion of businesses in Wales reporting access to capital to be a greater challenge than 12 months ago is close to the level seen before the worst of the credit crunch. Fewer than one in five firms (18%) report this trend in Q3 2010, compared to 40% a year ago. Although bank lending is reported to be constrained, other ICAEW work has found demand for new debt to be limited as firms work to manage their costs by other means. icaew.com/bcm Q1 2010 Q2 Q3 Firms in Wales report headcount up by 0.5% over the year to Q3 2010. This is the first time employee numbers have expanded since Q4 2008, and compares favourably to the UK as a whole where employment has declined by 1.3%. Welsh businesses are also expecting to hire 1.2% more employees over the next 12 months. Electronics giant Sharp announced a £30m investment at its Llay factory, with the potential to create hundreds of jobs as the firm doubles production of solar cell modules, while construction of one of the world’s largest offshore wind farms in North Wales is hoped to generate 1,000 construction jobs. Wales will, however, be hit by upcoming public sector spending cuts. Public sector spending accounts for about 62.8% of GDP in Wales. Significant job cuts within the Police, Welsh NHS, universities and local authorities are on the horizon and will inevitably lead to a contraction in consumer demand for goods and services. ICAEW ICAEW Wales PO Box 4274 Cardiff CF14 8GA T +44 (0)29 2002 1481 icaew.com/wales © ICAEW 2010 MKTPLN9550