North West profit squeezed

Published:  15 March, 2010

Manchester: Confidence among North West firms about prospects for the next six months has fallen amid concerns over a continuing profits squeeze, further job losses, and a lack of improvement in bank lending.

Optimism is lower than six months ago with more companies reporting a decline in earnings during the second half of 2009 than the first six months, according to a business confidence index from Santander Corporate Banking.

The average profit fall across the region over the past six months was 16.1%, compared with an average rise of 15.9% for the country as a whole.

The survey found 72% of businesses were confident about the outlook for their firms against 77% cent in September; the figures for 'not very confident' rose from 21% to 25%.

Santander's Chris Sharkey said: "Businesses in the north west remain generally confident about their prospects for the next six months but clearly the downward pressure on profits is hitting optimism."

Research by financial services outfit Clifton Asset Management found 15% of north West small and medium size companies expect to reduce staffing levels over the next six months, six% higher than in the previous quarter.

Two-thirds of companies believe the recession has another year or more to run, the highest figure for any region.

A key factor is that a similar number reported no improvement in bank lending, despite the government's Enterprise Finance Guarantee scheme.

Clifton Asset Management managing director Neil Greenaway said: "Our latest survey is confirmation, if it were needed, that the recovery will be a long, drawn-out and patchy process, and it speaks volumes that over two-thirds of those surveyed in the north west believe a full recovery to be at least a year away, with increasing numbers of business owners also planning to make job cuts in the coming months.

"Despite government assurances, our survey shows businesses in the north west are still not seeing many signs of an easing in bank lending gridlock," he said.

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