In this current period of economic uncertainty, Kelly Green, regional director for the North East at Lloyds Bank Commercial Banking, encourages North East firms to invest in their productivity to drive growth and boost competitiveness.
According to the latest Business in Britain report from Lloyds Bank released last week, North East business confidence – the average of firms’ expected sales, profits and order over the next six months – has slumped in the first half of the year, down 12 points to 25 per cent since January. However, the region remains in line with the national average.
Persisting political uncertainty is making it difficult for many firms across the North East to plan ahead, with question marks around the UK’s exit from the European Union viewed as the single biggest risk to business in the six months ahead.
As companies look to navigate this challenging landscape, it’s essential that they don’t neglect investment to boost in their productivity.
Productivity is essential to our economic prosperity – it drives up wages, employment and competitiveness. Yet despite the most recent official government figures showing an increase in national productivity of 0.9% in the first quarter of 2018 compared to the same quarter in 2017, Britain’s rate remains among the lowest of the G7 nations and well below pre-financial crisis levels.
Our research shows that British businesses identify a number of barriers to increasing their productivity. These include a shortage of skills in areas such as software and research along with factors such as an unfavourable tax system and a lack of investment in science and innovation.
The current climate means that many companies are reluctant to make the investments necessary to address such productivity challenges. That’s why it’s crucial that firms review the range of support packages at their disposal to kick-start their productivity growth.
These packages could include tools such as asset finance or invoice finance, which can help free up much-needed capital to help fund investment in staff training, education and new technology. A business adviser can offer expert advice to ensure that firms’ investments are targeted and impactful.
As part of our commitment to helping Britain prosper, Lloyds Bank recently launched a £500m Growth Fund that helps companies make business-critical investments, particularly those targeted at boosting productivity. We’ve also increased our lending to small and medium sized businesses by 31% since 2011. The market has contracted by 11% over the same period.
The North East has much to look forward to. The region remains one of the country’s advanced manufacturing powerhouses and is home to England’s fastest-growing energy sector. While there is no simple solution to the productivity problem, by being proactive, businesses stand the best chance of making themselves – and the wider economy – more productive and prosperous.
