TT171: Barnes Roffe Voice – Dec 2011 Report

January 23, 2012

Just how bad are things out there?

Well for our clients, Barnes Roffe’s Voice now has the answer. Our survey of more than 1,000 small and medium sized businesses suggests mildly more confidence than this time last year.

But don’t crack open the Champagne – that confidence is not likely to translate into jobs yet, or much investment. Money is still too tight to mention.

After what seems an eternity of slump. Maybe whatever else we deny ourselves in our January resolutions, it should not be any good news about the economy.

Our polling found two in three owners of Greater London and Home Counties businesses reporting that sales actually exceeded forecasts for the last six months of the year. They expect the first half of this year to at least match sales for the same period in 2011.

But this moderate good news comes with a health warning. It is difficult to decipher exactly whether sales improvement over the last six months of 2011 is down to undue pessimism earlier in the year, or actual recovery.

It may also be buoyancy from the so-called London effect, that potent mix of cash, globally-consequent enterprise and tourism that make the capital almost a city state in its own right. Who knows.

The results were not all good. Perhaps the most depressing discovery was that despite all the promises and Government prodding, banks still do not appear to be the friend smaller businesses can lean on. Six out of 10 owners said banks had “not positively” supported them over the past six months.

When we asked poor performing enterprises about their experience with banks, the result was even worse. Half gave such a negative opinion as to indicate that their involvement may have been detrimental. This is hardly helpful.

The sales story was actually mixed. At a sector level, retail and property investment businesses performed below forecast in the last six months. Along with the owners of transport and freight businesses, they also predicted lower sales for the next 6 months compared to the same period last year.

But, perhaps surprisingly, construction performed well in the past six months and along with manufacturing forecast further improvements on the previous year.

Optimism remains high in technology manufacturing and business-to-business equipment sales, too. Service sector sentiment for the next six months is also positive over the previous year.

But prospects for jobs seem less good, with 55% of companies suggesting that their employee numbers will definitely not increase in the first half of this year.

One in four respondents had strongly negative views potentially pointing to job cuts. New employment opportunities are likely to be at a low particularly in the service sector with low-technology manufacturing and retail close behind them.

In terms of future capital investment, a majority of businesses forecast capital spending to be the same or less in the next six months, indicating that confidence overall remains delicate. Sectors least likely to invest in new equipment include the service and manufacturing sectors.

We have called our survey “Voice” for one other single word: Frustration.

National surveys purporting to test business health are skewed towards the interests of big business and the City. The voices of smaller businesses fighting against the headwinds of our current economic turmoil are seldom assessed. We hope that our survey goes some way to addressing that discrimination.

There is no doubt that economically this is possibly the worst of times. But what we may be seeing isour Greater London economy beginning to turn the corner, even if it is doing so at 10 miles per hour in a 70 miles per hour zone. It will be interesting to hear what Voice has to report about how our businesses fair over the next three months as the impact of the Eurozone crisis and the Government’s austerity measures potentially take a hold on business in Greater London and the Home Counties.

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