Post-election bounce helps South West businesses pull ahead

By Anita Jaynes on 10 August, 2015

Businesses in the South West are on course for a summer of success, according to the latest Business Trends Report by accountants and business advisers BDO LLP.

BDO’s Output Index rose to 104.4 this month (up from 104.1 in July), which indicates growth in business activity. Businesses have reacted positively to the political stability after the general election, and increased certainty has encouraged businesses to invest and focus on their long term prospects. This is particularly true for sectors such as property and financial services which had feared policy change.

Although business optimism is down this month (falling from 103.9 to 103.2) it is still significantly above the long-term trend. This shows that the UK is starting to pull ahead from other global heavyweights in the Eurozone and some emerging markets. The dip in optimism this month can be attributed to the export-focused manufacturing sector and its dependence on global markets.

Companies have also benefitted from falling commodity prices. Although the BDO Inflation Index tipped into positive territory this month (rising to 95.2 from 94.6), cheaper commodities, especially oil, are keeping business costs down and improving profits.

Commenting on the findings, Andrea Bishop, audit partner and head of BDO LLP in the South West said: “Political certainty has bolstered short-term business confidence. The result is a thriving economy, despite global economic unrest.

“However, as business success continues to exceed other markets, the strong pound will make it harder for our exporters – particularly manufacturers – to find customers. We can’t let confidence tip over into complacency; keeping us competitive should be a government priority.”

Overview of the BDO indices:

An overview of all four indices is provided in the table below, detailing figures for the last three months and the same month of the previous year, to allow for comparison.

July 2015

(figures for this report)

June 2015 May 2015 July 2014

(equivalent report last year)

BDO Optimism Index 103.2 103.9 104.5 105.1
BDO Output Index 104.4 104.1 104.5 103.7
BDO Inflation Index 95.2 94.6 94.2 97.6
BDO Employment Index 108.4 109.1 111.3 109.6

 Pictured above: Andrea Bishop, audit partner and head of BDO LLP in Bristol