Business confidence rose 15 points to a record 119.4 in the second quarter of 2015 according to Smith & Williamsons Enterprise Index.
The result of the General Election, delivering a majority government, left businesses with the stability they craved.
More than 80 per cent of the 200+ business leaders who took part in the established quarterly survey expect the economy to improve over the next 12 months. 70 per cent of participants believe George Osbornes March Budget statement was good for business, so they have reason to be hopeful that policy will stay on track in his upcoming July announcement.
Eighty per cent of respondents believed that the previous coalition government was supportive of private enterprise and so were concerned about the effect an unclear election result may have had on growth. Following the Conservative victory, 87 per cent are optimistic about their own prospects over the coming year, with 83 per cent planning growth or an acquisition over that time frame.
Businesses fear EU exit
There were nonetheless some concerns expressed as the first majority Conservative government for 18 years brought with it the promise of a referendum on the UKs membership with the EU. Over 68 per cent of those surveyed believe that the so-called Brexit would negatively impact British businesses.
As 66 per cent of participants are expecting the financial health of their trading partners to improve and with the EU forming the largest destination for the export of UK goods, a potential Brexit will become an even more pressing issue as we approach the referendum.
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Eighty-four per cent of businesses believe that growing exports will be a key barometer of economic success for the new government so it will be interesting to see how policy makers handle this issue, whatever the result.
Talent shortages
Anecdotal evidence weve received from our clients has indicated that there is a deepening shortage of skilled individuals who can satisfy the increasing the demands of the countrys growing technology sector. Our survey supports this with only 45 per cent of businesses believing there to be an adequate talent pool.
This is a worrying result, considering 64 per cent of the businesses surveyed are planning to increase headcount in the next quarter.
The stress on the available talent pool can’t be ignored; businesses must train more people and upskill their existing workforces as capacity remains tight.
Were increasingly hearing of talent moving to countries such as the US where the marketplace is perceived to be more attractive and so it would be highly beneficial if action was taken to retain, and encourage, highly-skilled individuals to remain in the UK.
Tax incentives to encourage the further training of employees would be welcome. These incentives could, for example, take the form of a repayable tax credit to businesses, where tax relief is paid to businesses as costs on training are incurred. This could be a small incentive to begin addressing this issue.
Tim Adams is a director and founding member of the technology group at Smith & Williamson.
