An investment boom among West Yorkshire’s small and medium firms is on the cards as confidence continues to rise.
According to research among more than 1,100 firms by Yorkshire Bank, businesses are ready to invest more than £8 billion of their own turnover into the UK in the next 12 months, with new equipment, staff training and hiring people top of their shopping list.
Nine out of ten West Yorkshire SMEs said they plan to make a significant investment in their business in the next year. Based on the average investment of around eight per cent of turnover, this could contribute to around £8 billion of investment in the wider Yorkshire economy.
The investment is being driven by confidence in the UK economy with 73 per cent of SMEs in and around West Yorkshire believing it will grow and provide a strong environment for their own growth prospects.
On average, West Yorkshire firms expect to grow by around six per cent in the next year, while the figure rises to 11 per cent for Yorkshire as a whole, which could represent an increase of as much as £12.6 billion in turnover, or nearly £36,000 per firm.
The most bullish firms are in the agricultural, manufacturing and construction sectors, the report said.
It also said barriers to growth such as the lack of available finance and red tape continue to be an issue for around two per cent of firms.
Andy Davidson, head of Yorkshire Bank’s business and private banking centre in Bradford, said: “An increasing level of confidence is playing a critical role in fuelling the recovering economy, and our ongoing research indicates that as business optimism returns, the SME segment in West Yorkshire is actively preparing to change up a gear to take advantage.
“Compared to this time last year, we believe an increasing number of businesses are now preparing themselves for growth. New staff, premises and equipment are the tools which will allow businesses to create that growth.
“The message we are hearing from the majority of SMEs in the region is they feel there will be opportunities for them to grow in the year ahead, and we are ready to support those growth ambitions.”
In its latest business trends report, accountancy firm BDO said growth prospects for manufacturers during the rest of 2014 had strengthened.
The firm’s manufacturing optimism sub-index jumped to 120.8 in April, up from 119.4 in the month, as growth in the Eurozone helped boost export orders.
Stronger manufacturing performance pushed the overall optimism index up to the highest level in its 22-year history.
In comparison, the services sector index, which accounts for more than two-thirds of the UK economy, had remained flat since the beginning of the year, although with strong growth intentions. The positive outlook also signalled jobs growth, as businesses’ hiring intentions showed another large rise in April.
Terry Jones, partner and head of BDO in Yorkshire, said: “High growth expectations among manufacturers is a key highlight of this phase of the recovery, with a stronger manufacturing sector set to benefit the region in the long term by by rebalancing our economy away from London and the City.”