Resilience in the face of uncertainty and change

The UK is at a moment of pivotal change. The fundamentals of international trade, technology and global politics are all transforming. At BDO, we are optimists and believe the UK has the talent, ideas and entrepreneurial spirit to not only weather these changes but also to thrive.

This is corroborated by our annual analysis of business activity and performance in the Central South mid-market (£10-300 million turnover) now in its fifth year. Although profit margins are under pressure, in the past twelve months the regions’ mid-sized businesses still achieved a healthy 8% growth in overall revenue and 25% growth in turnover over the past three years.

Companies in key sectors across the region are showing resilience in the face of uncertainty and change. In identifying the latest top performers in manufacturing, technology, consumer, services, healthcare, real estate and construction a number of companies listed are showing sustained growth – appearing for a second or even third year running. But there are also new names joining the top ranks.

These are the mid-market companies that despite the challenges of Brexit and economic uncertainty are still successfully growing their businesses.

David I’Anson, partner at BDO in Southampton, said: “Our Central South region showed resilience through the economic downturn post 2008 and, although we won’t know for sure until this year’s figures are available, it seems that despite the recent period of unprecedented political and global upheaval, many local companies are still delivering real, tangible success. Businesses that respond to changing customer needs, embrace technological change and are fundamentally good at what they do will always do well.”

Tax partner Steve Hoon added: “We are delighted to again recognise the region’s top performers. However, there is more uncertainty ahead as the country seeks to negotiate its trade deals with the EU and further afield.

While some sectors could be more directly impacted than others, the overall strength of the UK economy affects us all and currently business confidence indicators are mixed in their outlook.”

Policymakers have a role to play here. They must ensure that everything possible is being done to help create an environment where business can flourish.

Supporting ambitious and entrepreneurial businesses

To enable the UK to move in the right direction with confidence we need to see the emergence of a ‘new economy’.

There are three broad objectives BDO think the UK Government needs to meet in order to create the right environment for economic growth.

Firstly, we want to see the needs of the UK’s mid-market and entrepreneurially-spirited businesses (what we call the UK economic engine) put at the heart of the Government’s economic policy.

Secondly, we want to see the UK economy balanced by region and sector. Our economy in the South East and City of London is an example to the world and is rightly celebrated but we need to be less reliant on it for UK growth. How can we apply the lessons of success there to the rest of the UK?

And, finally, despite the challenges that Brexit will bring, we want to ensure open and simple access to world markets and global talent.

Just after the UK EU referendum, BDO put forward a number of policies aimed at meeting these objectives. We spoke to our clients, business groups, policy makers and our own people to find out what challenges were front of mind and what ideas they would prioritise. The result has been a national ‘New Economy’ campaign outlining the five policy areas that we would like the UK Government to focus on.

Five policy areas

POLICY ONE:  Make business easier by simplifying tax.

POLICY TWO:  Create the right environment for businesses and local communities to flourish by investing in smart infrastructure.

POLICY THREE:  Support business growth by tackling the UK skills gap.

POLICY FOUR:  Help increase UK wealth by addressing Britain’s productivity puzzle.

POLICY FIVE:  Support entrepreneurs and scale-up businesses by creating new streams of patient capital.

So far the Government has made the right noises on many of these issues. Investment in infrastructure, an awareness of the need to improve skills and productivity and a pressing need to close the wealth gap between the north and south have all been identified as priority areas by the new Boris Johnson government. They have identified the right challenges now the Government must come up with the right solutions and we will continue to campaign for the right policy answers to help the UK thrive post-Brexit.

For more information contact Cheryl Martin:

cheryl.martin@bdo.co.uk

bdo.co.uk