As restrictions start to be re-imposed as part of the government’s ‘Plan B’ to manage the potential impact of the Omicron variant, new research from Grant Thornton UK LLP’s latest Business Outlook Tracker* finds that profit growth expectations in the mid-market have plummeted to an annual low.
Only 33% of 601 mid-sized businesses in the UK surveyed in early December expect to see an increase in profits in the next six months, a significant reduction when compared to July (67%). This is a low not seen since March, and is the lowest level recorded by the Tracker this year.
The latest survey finds that mid-sized businesses are less confident in their future performance than they were earlier in the year. Nationally, confidence around revenue growth within businesses peaked in the summer, with 83% expressing optimism in July/August, the figure plunging minus 17 percentage points to 66% by December.
Views captured in the latest survey were gathered during the initial outbreak of the Omicron variant, just prior to the announcement of the Government’s Plan B measures. This showed that only 64% of businesses are currently confident in their company’s funding position, falling -10pp compared to the last Tracker in October and reaching the lowest level since March.
Despite positive forecasts for the UK economy from the OBR, the latest Business Outlook Tracker finds that the mid-market’s confidence in the economy has continued to decline since July (65%, December compared to 79%, July). The bi-monthly research also recorded a significant drop across the whole year, with the number of businesses confident in the economy falling -15pp compared to January (high of 80%).
John O’Mahony, a tax partner who heads up Grant Thornton’s Gatwick office, commented: “I’m sure that many had hoped that the upheavals of the past 21 months were behind them, but instead restrictions are back in place, sectors such as hospitality are under severe stress, and inflation is soaring to its highest level for a decade. Despite all these challenges, the South East’s business leaders have proven themselves to be exceptionally resilient and agile since the pandemic began and they will have a lot of valuable experience to draw on as they face the challenges of 2022.
“This robust, entrepreneurial spirit combined with a regional economy that’s full of innovative, world leading companies means that the South East is actually in a good place to take advantage of any opportunities that arise in the New Year. If the government is able to follow through on its promise of quickly getting Omicron under control then there’s definitely a lot of reasons for businesses in the South East to start feeling optimistic again.”