5:16 AM 18th November 2020
Business Confidence Drops In Y&H With Sales And Profits Down
Businesses in Yorkshire and the Humber saw exports increase but faced sharp falls in domestic sales and profits, a new report found.
The Business Confidence Monitor™ (BCM) for the fourth quarter of 2020, published by chartered accountancy body ICAEW, found that Yorkshire and the Humber was one of only two UK regions where companies had seen an increase exports, albeit at a lower rate than the historical average.
Sales in Yorkshire and the Humber fell more than the UK average, offsetting any gains in business confidence related to the region’s export position. Profits were down by 4.1% on the same period last year, reflecting weak domestic sales performance.
Half of businesses in Yorkshire and the Humber said low customer demand was a growing challenge, a substantially higher amount than this time last year.
Overall, business confidence for Yorkshire and the Humber was found to be firmly negative, likely because the region’s manufacturing base was vulnerable to coronavirus-related shutdowns. The region’s businesses are more reliant on the EU market than most other UK regions, so are vulnerable to trade frictions in the new year.
Late payments and falling employment
A third of businesses in the region reported late payments as a growing problem, the BCM said, compared to 28% in the same period last year.
Meanwhile, businesses in Yorkshire and the Humber reduced employee numbers at a faster rate than nationally, the first fall in headcount since the beginning of 2012.
Next year, companies expect sales and exports to increase, and profits to rise as a result. However, growth, at least in the short-term, will depend on how long the second lockdown in England lasts.
Dr James Callaghan
Dr James Callaghan, ICAEW Regional Director for Yorkshire and the Humber, said: “In a difficult year, businesses in Yorkshire and the Humber have seen their domestic sales and profits down on 2019, and in common with the national picture have experienced challenges with late payments and a lack of customer demand. In this climate, it is unsurprising that businesses in our region report that their confidence is negative, and we hope for an improvement next year.
“Coronavirus-related restrictions and the uncertainty over trade talks with the EU have affected confidence among Yorkshire and the Humber’s manufacturing businesses. With the end of the transition period in sight, we urge the government to reach a fair trade deal with the European Union to stimulate and sustain the UK’s post-COVID recovery.”
Nationally the BCM findings showed that the proportion of companies struggling from a lack of demand had increased from more than a third in Q4 2019 to over half this quarter. Late payments were a rising concern for a third of businesses, indicating financial distress in the market.