An Instinct for optimism but firms still uncertain

However, KPMG’s second annual Yorkshire & Humber Business Instinct Survey also reveals that many businesses still have “grave concerns” about the economic climate and a desire for Government stimulus.

Sixty per cent of directors across the region expect to increase their revenue and profits over the next year, while 40 per cent predict growth in their workforce, according to the study.

This builds on the 57 per cent whose profits grew in the last year, and the 53 per cent who experienced higher turnover.

However, the survey suggests that the last 12 months have been tougher than expected for a “significant minority” of businesses. Approximately one in three suffered a fall in revenue and profits; twice the proportion expecting it.

Chris Hearld, KPMG’s Leeds office senior partner, said he was cheered by the results.

He added: “The data does, though, suggest some polarising of performance in the region.

“It looks as though the strong strengthened and the weak weakened, with a smaller tranche of the market than expected treading water.

“This also highlights how challenging forecasting is in a difficult environment, particularly for those in more weakly performing companies. Some will doubtless have pinned their forecasts, as well as their hopes, on economic recovery, meaning both have been dashed when this failed to materialise.”

Three quarters of those surveyed by KPMG cited Government growth initiatives as having “significant potential” to improve their experience of doing business.

Mr Hearld concluded: “It’s very striking that Government initiatives are the clear number one hope for an improved regional business environment.

“This raises questions in my mind about corporate confidence in the deliverability of an austerity led recovery.

“Business clearly believes that Government stimulated demand has a role to play and it’s worth noting that this is considered far more important than the relaxation in bank lending which we often hear about.”

KPMG’s Yorkshire Business Instinct Survey is based on responses from 75 Yorkshire and North Lincolnshire businesses, with a multi-million pound turnover.