Steve Harris, regional director for mid markets banking in Yorkshire with Lloyds, said the region’s corporations had shown “resilience” following 2016’s upheaval and that businesses could be set to benefit from improvements to poor digital connectivity.
Writing for The Yorkshire Post, Mr Harris said: “The year just gone will perhaps be one of the most memorable of the decade, with political and economic events creating an air of uncertainty for firms across the country. In this climate, Yorkshire businesses have demonstrated their ability to withstand shocks. In the wake of the EU Referendum, the July Purchasing Managers Index, the leading economic health check of UK regions, revealed that businesses in the region were experiencing a decline in output, new business wins and employment. The picture looked entirely different three months later in October. Yorkshire firms had bounced back to make a full recovery with output at its highest level of the year. New businesses stormed ahead of the UK average, and employment rates steadily returned to growth at a time of uncertainty.”
However Mr Harris said that companies will have to battle with some of the highest costs seen since 2011, with the weak pound and the increasing expense of employing staff set to hand firm’s new challenges.
“In the year ahead, the costs of hiring staff will add to the pressures already felt as a result of the weaker pound. In April, we’re expecting the launch of the apprenticeship levy, which will cost larger businesses 0.5 per cent of their payroll. In the same month, the national living wage will rise again by 30p an hour to £7.50, adding further pressure to firms’ balance sheets. The weak pound may be a significant contributor to rising costs, but it will also help those looking to export in the year ahead.”
Mr Harris added that opportunities should also arise as trade deals are negotiated ahead of the UK’s formal exit from the EU.
“Opportunities will also surface as Philip Hammond begins to act on pledges from the Autumn Statement. The commitment to improve digital infrastructure, for example, will be well received by Yorkshire firms. Almost a third of them told us in a recent survey that they felt held back by slow connectivity.
“Yorkshire firms may need to hang on to the resilience they have demonstrated in 2016. There are positive indicators such as export opportunities and infrastructure improvements, that can make 2017 a prosperous year for businesses.”