Thames Valley: Survey shows regional growth slowed in second half of 2016

Profitability and turnover growth in the Thames Valley slowed in the second half of 2016, according to the latest Thames Valley Business Barometer published by accountancy and business advisory firm BDO and PR and marketing agency C8 Consulting. 

Almost two thirds (67%) of companies surveyed stated that profitability had either improved or stayed the same compared with 82% in the spring. A similar pattern was also observed in regard to turnover, with 71% reporting that it had either increased or remained the same compared with 85% earlier in the year.

The survey, which was conducted during a six-week period from September to October 2016, revealed that just 48% of business leaders felt that general levels of economic confidence had either improved or remained the same in the last six months versus 70% earlier in the year (and 92% in autumn 2015), suggesting a drastic reduction in confidence which is now impacting on business performance with a drop in turnover, profit and pipeline.

In this latest survey, headcount remained relatively stable although increases in headcount had slowed. 83% percent of respondents reported numbers either having increased or remained the same compared with 85% in June. Looking ahead to the next six months, the region’s business leaders expect this stability to continue.

On staff attrition, 70% of respondents said that their level of staff turnover had not changed. However, 22% of businesses surveyed saw an increase in staff turnover in the second half of 2016.

Simon Brooker, partner and head of BDO LLP in the Thames Valley, commented: “Despite the apparent drop in profitability, confidence and turnover, other Barometer indicators such as headcount and staff attrition still remain healthy. When looking forward, predictions around turnover and profitability are slightly more optimistic although neither are expected to return to the levels we saw 12 months earlier.

“Eight months ago in our spring 2016 survey businesses appeared to be erring on the side of caution in the responses they gave. In this survey however confidence showed a marked decline and is at its lowest level since the Barometer began. It will be interesting to see how this plays out over the coming months as EU negotiations take centre stage. Future Barometer surveys should give a clearer picture of how current events have affected businesses in the Thames Valley.”

The latest Business Barometer also looked at the impact of the EU referendum results among businesses in the Thames Valley. Of more than 150 businesses surveyed, only 2% said that nothing concerned them as a result of Brexit. The need for clarity about the rules of trading with EU countries (58%) and the investment by government in local infrastructure (52%) came out as the two top concerns.  Other matters of concern included: the impact of protracted uncertainty caused by the delay in leaving, the impact of clients cancelling or delaying their projects, the impact of changes to the exchange rate, and the impact on the ability to recruit and retain the best talent.