Optimism tempered by call for more lending

Apr 29 2010 by The Journal

MORE than a half of companies in the North East say that business is up on a year ago, according to a new survey.

But hopes that the effects of recession are lifting have been tempered by a more than a third of firms surveyed for Bibby Financial Services Business Factors Index saying that they believed the situation was worse.

Over half of respondents said they feel their business is performing better than 12 months ago, and one in three said they felt hopeful for the future – displaying a general feeling of optimism among businesses in the region.

The split result echoed the results of recent reports, including the North East Business Barometer produced by the Journal and Newcastle Business School at Northumbria University, which noted a growth in confidence muddied by concerns about the strength and colour of the new Government. The Bibby survey found that 36% of small and medium-sized business owners admit that business is actually worse for them now than it was both six months and a year ago – suggesting that any confidence and optimism is not shared by all firms in the region.

Almost a third of businesses in the North East also said that business was tough and that they are only just surviving – this figure remains unchanged from the last Index showing that any optimism is not translating to an increase in business performance.

And businesses said that the number of new customers returning to North East firms has decreased since the last Index, from 69% to 49%.

The Index also reveals that almost one in three firms said they think the loosening of lending criteria will help the recovery come sooner.

Graham Cooper, Bibby Financial Services spokesperson for the North East, said: “The Index shows that trading confidence is on the up compared to this time last year in the North East, but many are erring on the side of caution.

“And quite rightly, as almost one in every three firms in the region have highlighted, the loosening of lending criteria could help the recovery come sooner for many in the region.

“The fact that so many firms in the North East have been managing suppliers more carefully will mean they are best placed to take advantage of opportunities going forward, but remain cautious as they look to the future.

“Small and medium-sized businesses will be instrumental in generating future growth, and both the finance industry and the next Government have huge roles to play in ensuring they have access to funding, providing them with the liquidity needed to invest in development.”