Seeking the positives

WE are again delighted to work with the Western Daily Press on the 2023 Business Guide

Looking back, 2022 was a year like no other. After emerging from a global pandemic, we hit a cost of living crisis. We all faced high energy prices, elevated inflation, rising interest rates and a general global economic weakness that meant the UK economy was in turmoil.

How have these national and international events affected the companies in the South West region? Let us look at this year’s list of the Top 150 companies and see how they have fared.

Top 150 Companies

As with previous years, we have a familiar pattern where UK-based international companies and foreign subsidiaries dominate the region. Once again, Imperial Brands takes the top regional slot, employing more than 30,000 people globally.

There is also little surprise that energy suppliers dominate the top regional spots with OVO, RWE Generation UK (NPower) and EDF energy generating large turnovers in 2022.

It is also good to see that Airbus consistently remains a top regional company with an international headquarters. Recently Airbus announced that they are strengthening their presence in the UK with the launch of a Zero Emission Development Centre (ZEDC) for hydrogen technologies. The new centre will be at their Filton site.

Once more, the Business Guide shows some solid regional performances with many bucking the economic downturn, but what is the general economic outlook for 2023?

Outlook for 2023

This time last year, we asked whether we were at the dawn of a new era of economic growth or heading towards another recession. At the time, the inflation rate rose to a ten year high of 5.1% and an interest rate increase, which was the first in more than three years. Sadly the new era of economic growth has had the brakes applied, and we are struggling in many economic areas.

The Office of National Statistics (ONS) paints a bleak picture of the business economy with more than a quarter (29%) of trading businesses reporting that they expected their turnover to drop this month. Almost a third (30%) of trading businesses said they expect to put their prices up this month, with 39% citing energy costs as the main reason.

Equally concerning is that the ONS showed that the number of potential redundancies reported by the Insolvency Service in December 2022 was 71% higher than in the equivalent time frame in 2021. The number of employers proposing redundancies has more than doubled since 2021.

The latest Business Confidence Monitor (BCM) survey by the Institute of Chartered Accountants in England and Wales (ICAEW) shows that business confidence has fallen across the UK. It results from difficult economic conditions and political turmoil affecting financial markets. The business confidence index that the BCM survey uses to gauge the market has fallen into negative territory, with all business areas affected. It now stands at -16.9, a figure reminiscent of the Covid pandemic and in stark contrast to the +47 recorded in Q3 2021. Most companies expect the economic prospects over the next 12 months to be more challenging than over the last 12 months.

In global markets, the International Monetary Fund (IMF) has stated that the slowdown in global economic activity is broad-based and sharper than expected, with inflation at its highest in decades.

The IMF forecasts global growth will slow from 6.0% in 2021 to 3.2% in 2022 and 2.7% in 2023. It is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the Covid-19 pandemic.

It is also little comfort to know that the UK is not alone in the economic problems. The Organisation for Economic Cooperation and Development (OECD) announced the world economy was “reeling” from the most significant energy shock since the 1970s. Predicted growth in almost every large economy will be weaker next year than in previous forecasts. Inflation hit people’s spending power in every major economy.

Is there a light at the end of the tunnel?

The Bank of England and the Office for Budget Responsibility have already declared their belief that the UK is in recession, with the downturn to last throughout 2023. However, the Government’s intervention on energy bills has reduced the risk of a severe downturn.

The economy is doing better than previously predicted. Although we are still looking to be in a recession, in the 3rd quarter of 2022, gross domestic product (GDP) shrank by 0.2% while the Bank expected shrinkage of 0.5%. In the last quarter, it was expected to drop 0.3%, but 0.1% was more likely.

The December increase in interest rates was the ninth consecutive increase, an increase every time the Bank of England met in 2022. Is there a glimmer of hope that the rate was lower than previous increases? Although inflation is currently at a 40-year high, interest rates are expected to peak lower than market expectations. The Bank of England isn’t the only bank slowing rate increases, with the US Federal bank raising by half of one percent.

Despite the signs of recession, the unemployment rate is forecast to peak at around 5%, which would be significantly lower than in previous downturns.

Feedback from the BCM survey showed that many companies still expect to expand employment as they focus on meeting orders. But with profits squeezed, they plan to cut back on investment. On the global stage, the IMF has stated that international policymakers should focus on restoring price stability and alleviating cost-of-living pressures. Green energy is very much in focus, while multilateral cooperation remains key to fast-tracking the green energy transition and preventing fragmentation.

It is hard to find the good news buried within the gloom of the forecasts and predictions, but it is there if we look deep enough. Inflation peaking? Growth on the increase? Is the unemployment rate lower than in previous downturns? Let us hope 2023 brings some positive news.

Seizing opportunity together

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2,822,699 9 10 SCREWFIX DIRECT LIMITED Yeovil The distribution of tools, fixings and equipment by mail order internet and through trade counters 246,700 2,310,700 13,584 10 15 PUMA ENERGY (UK) LIMITED Bristol To operate and expand the fuels storage and wholesale business throughout England and Wales 13,245 1,904,524 117

1,886,000

1,771,186

1,660,000 5,221

46

50

MAN

TRUCK AND BUS UK LIMITED Swindon The provision of importation and distribution of trucks and buses and related products and services within the UK

8,875 539,216 890 new VMWARE UK LIMITED Bristol The provision of sales and marketing support -6,564 519,807 1,079 48 61 OPENWORK HOLDINGS LIMITED Swindon A group engaged in the provision of financial planning, insurance broking services and investment funds, the purchase of franchises practices and the provision of human resources and administration services

49 59

OASIS HEALTHCARE GROUP LIMITED Bristol A group engaged in the operation of dental practices and provision of dental services -50,456 499,482 6,095

INTERNATIONAL LIMITED Bristol To develop and exploit technology related to augmented reality games worldwide, excluding USA 12,349 489,508 4

3,066 473,898

20,848 306,616 939 74 73 HERITAGE AUTOMOTIVE HOLDINGS LIMITED Salisbury A group engaged in sale of new and used motor cars, repairs and servicing 5,146 305,573 552

75 72 MASSTOCK ARABLE (UK) LIMITED Cheltenham The provision of agronomy advice supported by the sale and distribution of crop protection products 13,318 300,299 697 76 62 NATIONAL OILWELL VARCO UK LIMITED Stonehouse The provision of manufacturing, wholesale and servicing of equipment and accessories to the offshore oil and gas industry -74,048 289,710 2,123 77 76 ASPIRE DEFENCE HOLDINGS LIMITED Tidworth A group engaged as PFI contractor and finance provider 25,295 286,878 18 78 100 GALLOPER construction of the Galloper wind farm 140,359 285,000 group engaged in the production and sale of fresh mushrooms 3,328 276,456 1,728