BUSINESS RESILIENCE AND FUTURE PROSPECTS

riting in June 2023, it is hard to predict the future from looking at the past performance of EM Top 500 companies. However, having followed the fortunes of this group of businesses over the past four years, several observations can be made.

Firstly, all businesses experienced the impact of the prolonged COVID lockdowns and eventual recovery during the year. Some businesses were able to benefit but most experienced disruption, additional costs and loss of sales. They have also experienced, and adapted to, the lengthy Brexit separation and changes in trading, imports and exports from the European Union, and the associated effects on workforce, regulation, market access which continue to become more stringent and costly.

Having endured and risen stronger from adapting to these challenges, for over a year businesses have been confronting massive price rises in all energy costs as well as most raw materials, from foodstuffs to timber, cement, steel and plastics. These started to rise steeply during 2021 as the war in Ukraine and its effects accelerated these increases dramatically. As a result, inflation has risen, accompanied by continuing interest rate rises aimed by the Bank of England to reduce inflation, but which increase costs to businesses.

Recent economic data, such as the East Midlands Chamber Quarterly Economic Survey (Q1 2023) showed an increase in business confidence from Q4 2022, following over 12 months of decline. Optimism for growth in sales turnover and investment has increased, with price increases by firms slowing. There is continuing uncertainty on many fronts, both economic, but also political, and environmental, as we see in the effects of climate change. For these reasons, there has to be caution over the short-medium term economic outlook for the East Midlands region. But as the expectation of a recession in 2022 was avoided, this is less likely in the near future.

The East Midlands hosts a large and successful group of businesses which are generally very well-managed. In many cases they are world-leading, and continue to ride out and recover from the many challenges they encounter. They are also very diverse in the range of industry sectors and both UK and international markets which they service. International trade continues to be a growth area, enabled by the supplychain and logistics infrastructure the region has attracted. The combined effectiveness of leadership and management, and diversity of the business base, are enduring strengths.

In the 2022 report, the lack of regional political and civic leadership and its limiting effects for the profile of the East Midlands received comment. Since then, the proposal for an East Midlands unified authority has progressed, with the Derby, Derbyshire, Nottingham and Nottinghamshire areas included, and this looks likely to become reality, though the Leicestershire area chose not to participate. Also, the East Midlands gained the first inland Freeport, which is now operational and building its profile. It aims to drive economic regeneration across the region, based on an economic partnership seeking to deliver decarbonisation and Net Zero through low carbon energy investments, new jobs and skills. This is probably the most significant policy initiative the region has yet seen, building on the economic foundations of the East Midlands EMAGIC Airport, Gateway and industry hub and other sites, and creating the potential to deliver global impact. Words by Professor David Rae