The north-east is outpacing all other parts of the UK for export sales growth, a groundbreaking new report shows.
And it reveals businesses across the region are more confident about future prospects than their peers elsewhere in Britain.
But it also highlights ongoing concerns about inflation, driven primarily by rising labour costs, continuing to squeeze the profitability of companies.
This anxiety is more pronounced in Aberdeen city and shire than elswhere in the UK.
The first North-east Quarterly Economic Survey, launched today by Aberdeen and Grampian Chamber of Commerce (AGCC), in a new partnership with law firm Gilson Gray, benchmarks key indicators in the region’s economy, compared with the wider UK.
One of the headline findings is that north-east companies are performing better in international activities.
More than one-third (35%) of the region’s businesses have seen an increase in their export sales, outpacing the national average (27%) by eight-percentage points.
Future overseas order pipelines are also stronger in the north-east (30% vs 27%).
Other findings from the survey
- A higher proportion of north-east businesses feel their turnover will improve in the next 12 months (62%), compared to the UK (53%)
- More than one-third of north-east companies (35%) reported an increase in domestic sales, in line with the UK average
- There were fewer local companies (15%) reporting a decline in sales, compared with the UK as a whole (23%)
- A higher proportion of north-east businesses believe their turnover will improve in the next 12-months (62%), compared to the UK (53%)
- But more local businesses think the price of their goods/services will have to increase over the next three months than across the UK as a whole, due to a range of pressures
- The number of regional companies concerned about interest rates has also risen sharply since Q2 2023, from 41% to 50%, suggesting the cost of borrowing is also having an impact on bottom lines
What is the biggest gripe of firms across the north-east right now?
Inflation continues to be the biggest worry for businesses in the region, with 71% of those polled listing it as a concern, six percentage points higher than the UK average (65%).
This is squeezing margins, with only 41% of firms in the north-east expecting profits to rise over the next 12 months, compared with 45% in the UK.
The survey also found 57% of north-east firms expect payment pressure to increase, with 30% indicating the number of disputes and potentially litigation will likely grow.
Chamber will use survey findings for lobbying on behalf of north-east businesses at every political level
AGCC said its findings would provide an “evidence-base” to support the business group’s lobbying of all three tiers of government on behalf of firms across the region.
The chamber’s chief excecutive, Russell Borthwick, added: “We are hearing the same story from many companies – turnover up, costs up, ability to increase prices in line with this limited and profitability squeezed.
“While inflation may be starting to ease, it is still having a corrosive presence in the day-to-day operation of businesses in the north-east.
“High utility costs are also weighing on business performance, showing that while the pressure might be more tolerable, many businesses are still feeling the squeeze.”
While inflation may be starting to ease, it is still having a corrosive presence in the day-to-day operation of businesses in the north-east.”
Russell Borthwick, CEO, Aberdeen and Grampian Chamber of Commerce
He added: “The headline figures in the report, namely around turnover and sales, paints a positive picture for this region and shows that good times lie ahead if costs can be brought under control.”
Findlay Anderson, a partner in Gilson Gray’s Aberdeen office, said the north-east “continues to benefit from its position as a global hub for exports”.
But widespread expectations of increased margin and price pressure, as well as the potential for a greater number of payment disputes are a concern, Mr Anderson added.
Among other survey findings, there is no sign of the local labour market easing in the short-term. Four out of five north-east companies (83%) are having problems recruiting suitable staff, 10 percentage points higher than the rest of the UK.
Business rates remain a challenge. More than one-third of firms (34%) said they were a constraint to growth, far higher than the 25% average across the UK.
Key findings of the survey will be discussed at an AGCC business breakfast at The Chester Hotel in Aberdeen this morning.
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