Mike Parkinson is a senior partner at London accountancy firm Barnes Roffe LLP, which specialises in helping small and medium sized businesses. He has more than 22 years of experience working with the hotel, retail and service sectors in the Greater London area. He is based in Uxbridge.
Just how bad are things out there? Well, I have a crystal ball. A survey we have just conducted of more than 1,000 small and medium sized businesses suggests mildly more confidence than this time last year. But don’t crack open the Champagne - that confidence is not likely to translate into jobs yet, or much investment. Money is still too tight to mention.
For any one in my line of work it is encouraging to discover any confidence, albeit fragile, after what seems an eternity of slump. Maybe whatever else we deny ourselves in our January resolutions, it should not be any good news about the economy.
Our polling found two in three owners of London businesses reporting that sales actually exceeded forecasts for the last six months of the year. They expect the first half of this year to at least match sales for the same period in 2011.
But this moderate good news comes with a health warning. It is difficult to decipher exactly whether sales improvement over the last six months of 2011 is down to undue pessimism earlier in the year, or actual recovery.
It may also be buoyancy from the so-called London effect, that potent mix of cash, globally-consequent enterprise and tourism that make the capital almost a city state in its own right. Who knows.
The results were not all good. Perhaps the most depressing discovery was that despite all the promises and Government prodding, banks still do not appear to be the friend smaller businesses can lean on. Six out of 10 owners said banks had “not positively” supported them over the past six months.
When we asked poor performing enterprises about their experience with banks, the result was even worse. Half gave such a negative opinion as to indicate that their involvement may have been as detrimental. This is hardly helpful.
The sales story was actually mixed. At a sector level, retail and property investment businesses performed below forecast in the last six months. Along with the owners of transport and freight businesses, they also predicted lower sales for the next 6 months compared to the same period last year.
But, surprisingly to me, construction performed well in the past six months and along with manufacturing forecast further improvements on the previous year. Optimism remains high in technology manufacturing and business-to-business equipment sales, too. Service sector sentiment for the next six months is also positive over the previous year.
But prospects for jobs seem less good, with 55 per cent of companies suggesting that their employee numbers will definitely not increase in the first half of this year. One in four respondents had strongly negative views potentially pointing to job cuts. New employment opportunities are likely to be at a low particularly in the service sector with low-technology manufacturing and retail close behind them.
In terms of future capital investment, a majority of businesses forecast capital spending to be the same or less in the next six months, indicating that confidence overall remains delicate. Sectors least likely to invest in new equipment include the service and manufacturing sectors.
We have called our survey “Voice” for one other single word: Frustration. National surveys purporting to test business health are skewed towards the interests of big business and the City. The voices of smaller businesses fighting against the headwinds of our current economic turmoil are seldom assessed. We hope that our survey goes some way to addressing that discrimination.
For those of us who have worked through the recession of the early 1990s, and the boom that followed, this is possibly the worst of times. But what we may be seeing is a London economy beginning to turn the corner, even if it is doing so at 10 miles per hour in a 70 miles per hour zone.
