The crunch effect triples in six months, survey shows

Oct 22 2009 By Andrew Mernin, The Journal

THE number of North East firms whose outlook has been severely affected by the recession has tripled in the last six months, according to our latest health check on the region’s business community.

The latest survey of business confidence conducted by Newcastle Business School at Northumbria University for The Journal, has revealed that the proportion of companies whose market has begun to be adversely affected by the recession has also almost tripled since March.

Six months ago only 15% of North East businesses believed the recession had had a major negative impact on the market for their products, however this has since spiraled to 47%.

Meanwhile those who are just beginning to see an adverse effect from the recession has jumped from 7% to 20% during the six-month period.

A third of businesses believe their turnover will fall in the next 12 months, compared to just 7% in March, while 31% of firms expect a reduction in workforce in the coming year.

A significant proportion (13%) of firms questioned feel they are at a competitive disadvantage by being based in the North East, with a quarter of companies calling for an improvement in national transport links.

And where 84% thought the region was an excellent business environment in spring now only 33% believe that is true.

CBI North East regional director Sarah Green said: "Although growth this quarter should mark the end of the recession, conditions in the UK will remain tough for some time yet. and it is difficult to see where demand growth will come from.

"Firms that have run down their stocks will now be starting to raise output to meet demand, and consumers are likely to bring forward spending before VAT rises.

"However, once these two boosts are out of the way there is no clear driver of robust economic growth into 2010 – and the results of the Barometer research are testament to that."

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