Ian Patterson, area director SME Banking in the South East, Lloyds Bank Commercial Banking
We may only just have passed the midpoint of the year, but 2014 has already been hugely important for British business. This is the year that has seen the biggest jump in GDP growth since before the recession. It is also the year that saw employment levels reach the highest rate recorded post-downturn, and now, according to the latest Lloyds Bank Business in Britain report, it is also the year that has seen business confidence hit a new high.
Indeed, the bi-annual report which canvasses the views of 1,500 UK firms, revealed that the overall UK confidence level has soared to the highest point recorded in the survey’s 22 year history, reflecting business owners’ buoyant expectations for stronger profits, orders and sales.
This exceptional result is certainly exciting news for firms across the country and fuels hopes that this period of economic uplift is here to stay. It is also a clear indication that now is the time for firms to capitalise on this confidence, start making bold moves and seize new opportunities for growth.
The report, which records firms’ predictions for the coming six months, looks at a range of areas including recruitment plans, exporting and general business activity, revealing a lift in confidence across all UK regions – particularly in the South West, North East and Yorkshire. SMEs within the £2-5 million turnover bracket have led the way, as have the construction and manufacturing sectors.
Almost two thirds of the businesses spoken to said they expect their orders to increase during the second half of the year, and a similar amount said the same for sales. Compared with just seven per cent who expected to see a drop in sales, this is a hugely positive sign and demonstrates that consumers are still spending and demand is on the up. Furthermore, these predictions are also reflected in business’ hopes for rising profits, which have also increased for the fifth consecutive survey.
Strong trading conditions, and the expectation that this will continue, has meant that many firms are preparing to bolster their teams in order to meet demand and service new clients. Echoing the widely documented reports of falling unemployment levels, a third of the businesses we talked to said they will be increasing their staff numbers over the next sixth months, compared with just nine per cent that said they anticipated reductions.
Interestingly, business optimism is not just limited to domestic markets. A lot of business owners revealed they have high hopes for trading overseas, despite increases in sterling against the currencies of the UK’s main trading partners.
Over half of businesses said they expect to increase their exports over the next six months, particularly across Europe, closely followed by the US, Canada and Asia. Furthermore, this optimistic sentiment is also echoed in the latest Lloyds Bank Purchasing Managers’ Index which showed a significant proportion of businesses, particularly across the South East of England, cited that exports are already one of the primary driving forces behind a sharp rise in new order levels seen throughout the past month.
These findings strongly suggest that exporting will be a key area of growth for many firms moving forward, and thus an important method of expansion for firms to consider. Indeed, taking advantage of opportunities to establish or enhance an overseas presence is a great way for businesses to develop. There are several organisations, like UK Trade & Investment and the British Chambers of Commerce, which have a range of support services dedicated to helping firms to trade abroad.
Of course, for the vast majority of businesses, success ultimately boils down to hard facts and figures: balance sheets, profit and loss accounts and the all-important bottom line. But confidence should not be underestimated when it comes to evaluating the progress of business.
Increased optimism and a positive outlook are crucial if we are to continue creating a truly sustainable and robust economy, and confidence plays a fundamental role in allowing firms to take steps towards growth and expansion.
Furthermore, there is also a vast range of products and services available for ambitious business owners, and as part of our efforts to help Britain prosper, we have made some significant changes to our regional SME relationship teams. This includes the expansion of our sector-specific expertise, meaning all of our customers have access to support and guidance that is tailored directly to their industry. So from manufacturing and construction to retail and agriculture, we have a dedicated team on hand to help firms make their plans a reality.
This latest Business in Britain report shows that this confidence is definitely returning and the future is certainly looking bright. Evidently, a significant number of firms are gearing up for much higher levels of activity and during this exciting time, it is important they ensure they have the right financial support in place in order to back their plans for growth.