Business confidence has improved since the release of the last ICAEW Business Confidence Monitor in November 2017, but remains in negative territory. The Confidence Index has been negative for 6 of the last 7 quarters, but there are signs that it may be turning a corner.

Significant challenges

Two particular concerns seems to be holding back the level of confidence amongst UK business leaders.

Regulatory requirements remain the stand-out challenge for businesses, with almost half of the respondents reporting it as a concern. This most likely reflects concerns over implementing regulations that companies know they must implement, as well as worries over the post-Brexit regulatory environment.

The second major pre-occupation is the availability of non-management skills, which is also being felt more widely in the marketplace. It is spreading from manufacturing and construction to customer service and business sectors. The Office of National Statistics Vacancy survey put the number of job vacancies in the three months to December 2017 at 810,000 – the highest since 2001.

Positive signs

Difficulties in recruiting staff may, however, have some benefits for education and training organisations. Staff development budgets are increasing slowly as employers seek to hold onto staff and increase the skills of their existing workforce.

Despite the demand for talent at all levels, real wages are still falling, which should help companies who can offer tax efficient or non-financial benefits to retain and recruit staff.

Manufacturing sales are improving – input price inflation is no longer accelerating and profits in the sector are growing at 3.3% year on year.

Sales growth has been trending gradually upwards and is expected to continue to do so, with domestic sales slightly stronger than export sales, both last year and in 2018. Domestic sales up 4% on the same time last year.

Opportunities for growth

Whilst domestic sales growth improved slightly, exports have not, showing that businesses are still missing out on sales in the stronger economies in the rest of the world. Interest rate rises are expected to tighten the purses of UK consumers further so this may encourage UK companies to look further afield for growth.

For help and advice on responding to the challenges facing your business, contact WMT’s Adrian Le Roux on 01727 808192 or by emailing adrian.leroux@wmtllp.com