North West Firms Surpass Growth Targets but Fear Market Challenges

Research conducted by BDO reveals that most mid-sized businesses in the North West of England are exceeding their growth expectations for the year, yet many are expressing concerns about the future business environment in the UK. The findings from the latest Economic Engine report indicate that 71% of the 500 firms surveyed have reported stronger-than-expected performance in 2023, with 23% stating they have significantly surpassed their targets.

A variety of factors are driving this positive growth. Notably, 52% of businesses attribute their success to the introduction of new products and services, while 36% cite improved staff recruitment and retention. Investment remains a priority, as 66% of firms have maintained their capital investment levels and 29% have increased their investments, with only 6% planning to reduce spending.

Despite this optimistic outlook, confidence in the broader UK market is waning. Approximately 66% of respondents reported that business conditions have become more challenging, and only 34% view the UK as a strong environment for long-term business growth. In response, 23% of those polled are already considering relocating operations or investments overseas.

Challenges Amid Growth Opportunities

The study also highlighted significant areas of concern for mid-sized firms. Around 51% expressed a desire to invest in automation, technology, or artificial intelligence, while 46% are seeking new investment or financing options. However, half of those surveyed indicated that skills gaps remain a critical challenge, and 34% pointed to supply chain disruptions as a barrier to growth.

Angela Cross, the regional managing partner at BDO in the North West, noted the dual nature of the findings. “These findings highlight the strength of the North West’s mid-market—businesses are delivering growth and continuing to invest despite challenging conditions. But they also carry a warning; confidence in the UK as a place to scale is not guaranteed,” she stated.

Cross emphasized the vital role that mid-sized businesses play in the regional economy, noting their contribution to job creation and overall economic strength. She urged the government to leverage the upcoming Autumn Budget to provide reassurance to this sector, addressing ongoing issues related to skills, costs, and competitiveness.

With mid-sized firms continuing to be a cornerstone of economic growth in the North West, the need for a supportive business climate is more crucial than ever. The findings underscore the importance of confidence in the market, which is essential for sustaining growth and fostering a vibrant economic future in the region.