Businesses in the South well positioned as the year progresses
Overall, last year was a fairly positive and consistent one for businesses in the South, despite the impact of higher energy prices, the cost of living crisis and geopolitical instability in the second half of the year, writes Steve Gritt, Head of Corporate Banking South Coast, Surrey & Sussex.
Clearly the headline economic challenges of the previous year are set to continue through 2023. The tight labour market and the battle to attract and retain both young talent and more experienced hires will be a huge issue for organisations and likely to drive further wage inflation.
Having come through the pandemic, most SMEs have already optimised their business models and improved efficiency by embracing new technologies. Consequently, if we do face a prolonged slowdown this year, many firms in our region are fairly robust and have plenty of cash on their balance sheets to see them through rough periods.
Environmental, Social and Governance (ESG) agenda firmly on the radar
More than ever before ESG is going to be a growing focus across all sectors – primarily its environmental aspects, but increasingly the social and governance elements too.
With sustainability high on the agenda for many businesses, it is important that the cost of doing business does not overshadow this important transition. For projects with long-term sustainability at the core, sustainable financing may be a suitable option to support any immediate shortfall in cashflow.
Embracing ESG may also help SMEs alleviate recruitment issues by potentially attracting employees who put greater emphasis on working for ethical and environmentally conscious organisations.
Cause for optimism
With the establishment of the region’s Freeport at Southampton now a reality, there is growing optimism around the potential investment they will bring through grants, beneficial rates and tax breaks, along with new infrastructure investment and development.
For example, funding is in place to build a new runway at Southampton Airport which will draw more people into our region and build on the already substantial visitor traffic and economic activity generated through Southampton’s cruise ship port.
It’s a privilege to support such a diverse range of businesses, across a breadth of
markets, most clients we look after are strong and prepared enough to manage challenges, are still hungry for growth and are actively seeking ways to develop their businesses. So, all things considered I think the region is well placed as we move through 2023.
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