Before the Central South was hit, like all other regions, by a global pandemic, the region was performing well and was on a very firm footing. The figures from our latest monthly Rethinking the Economy survey of 500 mid-sized businesses in the UK has tested the impact of Covid-19 across the regions, to gain detailed insights into the current thinking of business leaders.
The Central South’s strong foundation is setting the tone for our region’s response to, and recovery from, COVID-19. Businesses across the Central South have outperformed the national average for embracing innovation during the pandemic, with 43% of businesses in the region having launched new products or services, which compares to a national average of 29%. Survey respondents have also resisted COVID-19 impacting their growth plans, with 37% pushing ahead with mergers and acquisitions. It’s fair to say that, despite the significant challenges being faced, companies in the Central South remain optimistic about the future. Over three quarters of companies (77%) have confidence in their resilience over the next 12 months.
Diversity underpinning growth
So, what gives the region such optimism when the country faces an ongoing battle with the economic impact of the pandemic? The region has weathered previous downturns well. One important factor is its diversity. Not being reliant on just one or two key sectors for its economic success makes it more resilient than some other areas of the UK. Its economic centres have also performed well in recent years. Portsmouth has seen particularly strong growth in a number of areas such as marine and maritime, advanced manufacturing and engineering, plus the growing digital and creative industries sector. Bournemouth has been home to one of the UK’s fastest growing technology hubs. Southampton’s economy was predicted to grow by 18.5% over the next decade with employment levels expected to rise by 10%. Despite these figures from Cebr being released prior to the onset of COVID-19, our own poll suggests that this foundation underpins positive behaviour amongst businesses in the region.
Ongoing focus on cash flow
Mid-market companies have taken decisive and diligent action in adapting to the pandemic. In addition to investment, acquisitions and innovation, our research shows that companies have also divested parts of their businesses (30%) and automated processes (27%). These are all trends that show forward-thinking business owners are either pursuing growth or finding new efficiencies and ways of working that mitigate the financial impact of COVID-19.
Unsurprisingly, it’s the subject of workforce that is one of the biggest challenges. While around two thirds (63%) of Central South respondents are concerned about effectively managing supply chains, with over half (53%) focused on protecting cash flow, it’s the 80% of companies in the region that expect to make redundancies once the Government’s job retention scheme ends, which may put a dent in the previous growth aspirations of the three Local Economic Partnerships (LEPs) within our region (Dorset, M3 and Solent)Clearly, regional companies remain focused on protecting cash flows in these uncertain economic times and, unfortunately, assessing whether redundancies are required is still a reality for many businesses.
Resilience and positivity
However, a large proportion (77%) of local companies surveyed remain confident about their resilience in the next 12 months and expect either a six month bounce back in the UK economy (33%) or just a year-long recovery (50%). Such belief and positivity will help businesses to more effectively address key operational concerns and bounce back from the disruption and losses of the past six months.
As part of our ‘Rethinking the Central South’ focus, over the coming months BDO will be tracking how our region’s mid-market businesses meet the challenges ahead and sharing insights from its business leaders as they make that journey. You can find out more about how Rethink is supporting businesses on our hub.
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