Ipsos and RDA network publish National Business Survey
Business confidence is expected to deteriorate further over the next 12 months, according to the latest National Business Survey conducted by the leading independent research company Ipsos on behalf of England's Regional Development Agencies (RDAs) and Invest Northern Ireland.
However, business planning and investment into marketing and sales may help businesses weather the current economic downturn and come out stronger when the upturn comes.
As one of the largest business surveys being conducted in the United Kingdom today, the RDA National Business Survey is unique in its coverage of all parts of the economy and shows that over half of those businesses who took part expect the business climate to deteriorate further in the next 12 months; however 10% think it will improve.
Business confidence has fallen sharply across all regions and sectors with the Construction and Retail sectors feeling the effects of the current economic climate more than most.
The responses of over 5,000 companies across England and Northern Ireland show that 39% of businesses expect their output to fall in the next 12 months; however 18% think it will increase. This shows a further drop compared to the last 12 months with a third of businesses reporting declining output levels in the year to December 2008.
The survey shows 64% of businesses report that they are operating below capacity; an increase of businesses from the 59% when the survey was first conducted in June 2008. Profit margins are also continuing to feel the squeeze with more than half of businesses reporting a fall in profit margins over the last 12 months.
Businesses are reporting lower cash-flow over the last 12 months, highlighting the importance of credit support for businesses during the economic downturn such as the Government's Real Help for Businesses package announced this month.
However, whilst business confidence has declined, firms across the UK are focusing on initiatives which have a direct, measurable impact on output and profits to help them weather the current economic downturn.
Over a third (35%) of businesses intend to invest more on marketing and sales over the next 12 months compared to the last 12 months which may help them strengthen their market position in a recession.
The survey indicates that those businesses planning ahead are much better placed to cope with the current economic climate. Businesses with formal business plans (33%) are more likely to anticipate higher domestic orders and export orders in 2009 compared to those businesses without formal business plans (63%).
One in five businesses (22%) also report that numbers employed were lower over the last 12 months and 26% of businesses anticipate lower employment over 2009. However, despite battling the current economic challenges, 16% of businesses reported that they had staff vacancies which were hard to fill over the last 12 months. These vacancies make up just some of the reported 530,000 vacancies in the UK economy between October and December 2008 (ONS 2008).
Terry Hodgkinson, Chair of Yorkshire Forward speaking on behalf of the RDA National Network said: "In this difficult economic climate it is more important than ever that we are constantly in touch with business on the ground in order to tailor business support effectively and efficiently. The National Business Survey helps us do just that - across all regions and across all sectors.
"As a network we are working with Business Link, support agencies and local authorities to ensure that businesses gain the practical support they need to help them weather the economic storm and come out stronger when the upturn comes. We are also working to ensure that when redundancies do occur; those affected are well supported in being connected to jobs and any appropriate training."
Technical Note
The National Business Survey is managed by the Regional Development Agencies and carried out by Ipsos. The National Business Survey is designed to collect timely and relevant information on the issues and needs facing businesses in England and Northern Ireland and is a fundamental mechanism that helps the RDA Network to understand and respond to key business issues.
The survey is one of the largest and most statistically robust of its kind carried out in England and Northern Ireland with over 5,000 companies responding from all sectors of the economy. The survey uses a predominantly postal methodology and the respondents had the option to complete the survey online. Data are weighted to represent the regional business profile by business size (number of employees). The National Business Survey is carried out twice a year (spring and autumn) with the latest findings covering opinion from the months June 2008 to December 2008, the survey asks a variety of questions ranging from business optimism to orders and output, skills issues, cost pressures and environmental performance.
