Resilience is key to Yorkshire’s economic recovery
Mark Thornton, Partner in business restructuring, discusses the latest findings from our Rethinking the Economy survey.
Resilience is synonymous with Yorkshire; this alongside the ambition to succeed, have defined the region far beyond the confines of the last 12 months.
But it’s precisely the last year that has crystallised that deeply embedded ethos and shown just how resilient Yorkshire businesses are in rebounding from the challenges of a global pandemic.
Our latest Rethinking the Economy survey demonstrates this in action, with 67% of businesses in the region who participated expecting revenues to return to pre-pandemic levels within a year of the strictest restrictions being lifted. If you combine that renewed business confidence, with a strong desire to invest and grow, that commitment to resilience will undoubtedly pay off in the months ahead.
Growth in Yorkshire
Growth is two-fold – 85% of Yorkshire businesses surveyed state that 2021 is the year to invest, whether that’s expanding by investing in new locations or acquiring other businesses. Interestingly it’s also in human capital where businesses believe growth will come. An overwhelming 95% of those surveyed plan to recruit more staff in the next six months, with 65% planning to hire more permanent staff. Half are looking towards a temporary workforce in order to provide the flexibility to balance both resource and market demand during the course of 2021. In light of the Government’s £3,000 incentive, the majority (62%) also said they would hire apprentices within the next six months.
There’s little doubt that mid-sized businesses in the region will play an integral role in the UK’s overall economic recovery. Pre-pandemic, mid-tier businesses provided a significant proportion of jobs in the region and this looks set to grow over the next 12 months.
Resilience in Yorkshire
Across the board, key performance indicators (whether that’s economic or public health-related) appear to be heading in the right direction. It’s clear that Yorkshire businesses are buoyed by generous Government incentives and a clear roadmap out of the coronavirus pandemic.
While certain trajectories are going up, there are some unwavering priorities that have remained steadfast during the first quarter of 2021. Growing revenues, managing the impacts of COVID-19 restrictions on businesses, and restructuring workforces to avoid redundancies, remain key objectives, together with the need to manage cashflow. This demonstrates that the challenges of COVID-19 are by no means over.
The challenges ahead for Yorkshire businesses
Despite resilience, and renewed business confidence, a significant number of businesses and sectors continue to suffer at the hands of the global pandemic – in some instances, otherwise viable businesses are finding themselves in unfamiliar financial territory and, in many cases, for no reason other than the impact of COVID-19.
It’s unsurprising that revenues continue to be severely tested, with the level at which income has been impacted by COVID-19 for many sectors, compared to normal circumstances, worsening since January. Retail, hospitality and leisure continues to face challenges, notwithstanding the reopening of non-essential businesses on 12 April is positive news for many. The reality is, few businesses have come away from the crisis unscathed, with nearly a third of Yorkshire businesses (32%) surveyed stating that their business model or product has, or will need to change as a result of the pandemic.
Furthermore, the impact of increased debt levels resulting from unprecedented support from Government, lenders and other creditors will remain a critical challenge for many businesses across the region. With the right support, managing cash and creditors will be fundamental to capitalising on growth and investment opportunities (including workforces) throughout 2021 and beyond. While there is a genuine reason for renewed confidence, the road ahead remains a challenging one.
If you would like to discuss how you can strengthen your business, improve working capital management or are facing challenges and need support with regards to exploring business restructuring options, contact me on (0)113 204 1216 or email [email protected].