As a result of the increased confidence, firms in the region are seeking to expand investment as economic conditions improve. Research and development budgets in the region are forecast to rise by 2.3% over the coming year, up from expectations of 1.0% growth last quarter. This is the strongest outlook for R&D in any part of the UK and follows an increase of 1.7% over the year to date.
Firms in the East of England are projecting larger increases in wages than any other region. Following a reduction of 0.9% over the last 12 months, average total salaries are projected to rise by 1.9% over the coming year. This compares to the UK average forecast of 1.4% growth. Average basic salaries are expected to grow by 1.6% – also marginally ahead of the UK average – following an increase of just 0.3% over the year to date.
As well as increased optimism for earnings growth, expectations for staff headcount are also positive. The number of employees in the East of England is forecast to rise by 1.1% in the coming year, having shrunk by 1.4% over the last 12 months.
This improved outlook for employment in the region likely reflects an improvement in customer demand for East England firms. Customer demand appears to be picking up this quarter with one in four firms (25%) reporting it to be less of a challenge to business performance than a year ago. Throughout last year, fewer than 10% reported this trend.
Pippa Bourne, Regional Director of the Institute of Chartered Accountants in England & Wales in the East of England said “The continued rise in confidence in our region is encouraging and it is essential businesses receive the support they need. However, there’s no room for complacency. Access to capital still appears relatively tight for firms in the East of England. A third of firms report access to capital as a greater challenge to performance than a year ago. This may mean some businesses in the region are unable to capitalise on the opportunities of increased customer demand.