Yorkshire businesses lead the UK 'out of recession'
Tuesday, 12 Jan 2010
New figures suggest that the economy exited recession in the final quarter of 2009, with businesses in Yorkshire & Humber leading the way back towards growth.
The Yorkshire & Humber Chambers of Commerce Quarterly Economic Survey asked 645 businesses in the region about their performance between October and December 2009. It shows that sales returned to positive territory for the first time since the recession began and the region’s service sectors were more optimistic about their future prospects than in any other part of the UK. There were also improvements in order books and exports, and the number of firms cutting jobs is half the figure at the start of the year. All fourteen key indicators measured in the survey improved during the quarter.
58% of businesses in the region’s service sectors expected profits to grow in the next few months with 19% expecting them to shrink. The net balance of +40 is the strongest of any region for the second consecutive quarter, suggesting that Yorkshire & Humber is relatively well placed to lead the country out of recession in the final quarter of 2009. There was some improvement in manufacturing confidence, with Yorkshire & Humber ranking 4th out of the 12 UK nations and regions. Overall levels of business optimism were strongest in York (+60), Leeds (+45) and Doncaster (+45).
The improvement in all fourteen key indicators since the third quarter is welcome, particularly as export sales and orders have risen particularly strongly for the first time since the recession began. However, economic problems persist and the rate of improvement for key indicators such as cashflow, investment, employment and turnover expectations has slowed markedly. For example whilst the cashflow balance has improved by 8% to a net balance of –7, this means more businesses cashflow position is still deteriorating than the number improving. More businesses are still cutting capital investment than the number increasing it, and the number of firms increasing the size of their workforce is unchanged on the previous quarter.
Richard Wightman, President of Yorkshire & Humber Chambers of Commerce said:
“The past twelve months have been as tough as many businesses can remember and despite the welcome improvement in economic outlook we should not expect a rapid turnaround in 2010. We will have to wait for a strong recovery in jobs, cashflow remains tight and investment low, but most businesses are now confident about their future prospects for growth and this is starting to translate into sales and orders.
“More than twice the number of businesses in our region expect profits to grow in 2010 than they did as they entered 2009 and Yorkshire & Humber tops the UK league table for service sector confidence for the second consecutive quarter. The improvement in export markets for Yorkshire & Humber firms is also a significant boost as this will be a key factor in the recovery.”
“Major challenges remain as the economy is weaned off the multi-billion stimulus packages pumped in by the Bank of England and Government, but this survey adds to the growing evidence that the economy is already growing again. The recovery will not be quick or easy, but the very fact we are now staring recovery in the face is a much better scenario than many people envisaged a year ago.”
Yorkshire & Humber consistently outperformed the rest of the UK on key indicators during this quarter. Commenting on the UK results, David Frost, Director General of the BCC, said:
“Although these results are not as impressive as hoped, they do contain some positive features - most notably strong improvements in employment and exports within the manufacturing sector.”
“Businesses are showing resilience despite difficult and uncertain trading conditions. Confidence is improving, and the boost in exports must be nurtured in order to strengthen Britain’s trade position globally, and to help rebalance the economy away from an over-reliance on the public sector.”
”Unless the private sector is given the freedom to create jobs and wealth, the UK’s economic recovery will be slower than it should be, and we will face the serious risk of a double-dip recession.”
David Kern, Chief Economist at the BCC, added:
“With improvements in most key national indicators, the Q4 results support the view that we are on the brink of leaving recession. However, with a number of critical measures still in negative territory, the economy is struggling to enter the recovery phase.”
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