BUSINESSES that form the “engine room” of Yorkshire’s economy have bucked the national trend to report improved confidence levels over the last quarter, according to a new study.
Many of Yorkshire’s small and medium-sized enterprises (SMEs) are planning to keep growing in the face of Brexit uncertainty.
However, the health of SMEs across the UK has fallen to its lowest level in three years, according to the SME Health Check Index.
The index is a new quarterly economic index compiled by the Centre for Economics and Business Research Limited (Cebr) in association with CYBG plc, the owner of Clydesdale and Yorkshire Banks.
The index measures business performance and the economic environment affecting SMEs, including bankruptcies, business costs, capacity, confidence, employment, gross domestic product, lending and revenue.
In the first quarter of 2017, the index overall fell by almost 10 points, from 56.4 in the final quarter of 2016 to 46.5.
During this period, inflation was outstripping wage growth which limited consumer spending.
The weakened currency also raised the cost of imported commodities and materials.
In Yorkshire, the Index rose slightly during the first quarter of 2017 to 58 points, largely due to improved business confidence, earning it second spot in the regional rankings. Employment is estimated to have remained unchanged, and although lending to SMEs fell for the third consecutive quarter, in Yorkshire the rate of decrease was only slight.
David Duffy, the chief executive at CYBG, said: “Small and medium-sized businesses are the absolute engine room of the British economy, and their future prospects are going to be ever more critical in a post-Brexit world, where we are dependent on a stronger and more competitive domestic economy.
“It is vital that we understand how SMEs are performing. The creation of the SME Health Check Index brings together a range of indicators on the health of the UK’s SMEs for the first time. It will be an important tool in helping understand how we can better support SMEs.”
“This research clearly indicates SMEs are facing challenges, but we want to further support our customers with robust insight that clearly explains where businesses are prospering, the areas of concern and identify trends, so we are in the strongest position to help. We hope this will lead to a more informed debate about how we can make these businesses succeed.”
Graeme Sands, the head of business banking at CYBG, told The Yorkshire Post that the most “significant difference” between Yorkshire and the trends recorded nationally related to the rates of growth and revenues.
He added: “Nationally, it has slowed, but that does not seem to have happened in Yorkshire, or at least it is nowhere near as pronounced.
“In Yorkshire, lending to SMEs has increased, which is not consistent with the slight reduction we have seen nationally.”
Mr Sands said there was clear appetite to target capital and growth from within the region’s corporate sector.
Commenting on the study’s national results, he added: “It’s clear that SMEs faced a challenging start to 2017 with a number of indicators contributing to a weaker position. We will be watching closely to see how these numbers change.”