It might be the lighter nights, the daffodils in bloom or the reopening of more shops that is making me feel more positive this month.
This last year has been tough. And the third lockdown has been even more difficult – with so many businesses shutting at Christmas and not knowing when they would be back trading. Fast forward to April and the high street is starting to open up again, with restrictions slowly being lifted. All of these changes are an adjustment for everyone, but there is cause for optimism.
According to our latest Virgin Money Business Pulse, small and medium-sized enterprises (SMEs) agree with this more positive outlook, with Yorkshire and the Humber having the accolade of being the top performing region in the UK according to the report. We publish this data twice a year and it provides a comprehensive insight into the performance of the UK’s SMEs and the environment in which they operate.
The overall business performance and outlook indicator rose from 33.6 in Q2 of 2020 to 42.9 in Q4 – which is good news. The business creation indicator was at a record high in the last three months of 2020 as the annual growth rate in the number of registered companies surged to 8.3%. That’s the highest since the Pulse began in 2014 and highlights growing confidence among entrepreneurs. This is underlined by data from Companies House, which shows that over 90,000 additional businesses were created during the pandemic in 2020 than in 2019.
By contrast to most regional labour markets, in Yorkshire and the Humber employment rose by more than 22,000 between Q2 and Q4, pushing the annual rate of employment growth up to 0.9%. This bucked the trend seen in other parts of the UK and was the highest annual rate of employment growth at the end of last year.
Our research with SMEs in the area also showed that nearly one in five (18%) expect to take on more employees in 2021 as they focus on pursuing growth. The overall measure of business performance and outlook rose across the UK from 33.6 in Q2 to 45.9 in Q3 2020, as restrictions eased and industries such as hospitality and retail reopened in the third quarter of 2021.
The relaxation saw the economy bounce back with quarterly GDP up 16.1 per cent. But the return of lockdown restrictions at the end of the year saw the business performance and outlook score drop to 42.9 in Q4, which remains below pre-pandemic levels.
It’s encouraging that firms in Yorkshire and the Humber have adapted with incredible pace to this new environment, demonstrating extreme resilience and innovation to navigate through the difficult landscape.
While there are undoubtedly significant challenges ahead, many businesses remain optimistic and intend to invest for the future as the economy recovers. Our research suggests that more than a quarter (26 per cent) of SMEs surveyed in the region plan to invest between £10,000 and £10 million this year – an increase of 23 per cent over a typical pre-pandemic year, underlining their focus on growth in a post-Covid-19 future.
If this last year has taught us anything, it is to expect the unexpected. We will always be led by our customers, evolving our approach to help plan and finance the changes needed for whatever the future brings.
We have been working to rebrand our business bank to Virgin Money, which happened in mid-March. We’re excited to bring the Yorkshire Bank and Virgin Money names together – both brands are synonymous for their approach to service and putting at the customers at the heart of the business. That will continue as we move forward and navigate this post-Covid economy.
Gavin Opperman is the group business banking director at Virgin Money (formerly Yorkshire Bank)