Although activity and new orders fell towards the end of 2024, South West businesses remain confident of a rise in output this year!
The South West Growth Tracker Business Activity Index in December was, at 49.7, close to the 50.0 ‘no change’ mark. Interestingly, however, although firms reported that output volumes had been negatively impacted by the Autumn Budget, high borrowing costs and cautious client spending, they were still confident that output would rise during 2025.
For more detail, please read the article below which was issued by Insider Media today.
Roger Mundy, Managing Director, Beardsley Theobalds, 14th January 2025
South West businesses remain optimistic despite activity and new orders falling at the end of 2024 - firms cite Autumn Budget as reason for decline
Activity and new orders fell in the South West in December, according to new research, however firms remained confident of a rise in output with marketing efforts and investment set to drive growth.
Despite a fall in business activity, the South West Growth Tracker Business Activity Index was at 49.7 in the month, close to the 50.0 no-change mark and indicative of only a fractional rate of reduction.
According to local firms, output volumes were negatively impacted by the Autumn Budget, high borrowing costs and cautious spending among clients.
December data highlighted a moderate decline in new business placed with private sector companies in the South West, ending a one-year sequence of growth.
Participants found that sales were restricted by client hesitancy, tamed customers spending and the Autumn Budget announcement.
Elsewhere, firms trimmed headcounts at the fastest rate in over four years and one that was sharper than that seen at the UK level. Panellists indicated that the upcoming rise in staff costs caused redundancies and prevented them from replacing leavers.
However, businesses said that they were still confident that output would rise in the coming 12 months.
Faye Long, chair of the NatWest South West Regional Board, said: "South West companies ended 2024 on a weaker footing than generally seen throughout the year, but they were optimistic regarding growth prospects in 2025.
"In their view, most of the weakness observed in December stemmed from the Autumn Budget announcement, which caused anxiety among clients and led them to restrict purchases. Local firms reduced output volumes and payroll numbers amid the upcoming increases in employer National Insurance and the minimum wage. "Some panellists indicated that their suppliers are already charging more for inputs as a result of future increases in staff costs. A pick-up in cost pressures underpinned a sharper upturn in selling prices at a time when staying competitive is crucial to support sales."
