Handling the Evolving Agenda (From York Press)

Handling the Evolving Agenda

8:02am Wednesday 7th October 2009 in

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As we start to wonder whether the region’s business community has now withstood the worst of what the recession has to throw at us, it’s a good time to take stock and consider what the most significant opportunities and risks are likely to be during the next few months. I’m discussing with my clients how they handle the recovery given that many businesses actually encounter bigger challenges as the economy pulls out of recession.

Having lived in the York area most of my life – growing up in Huntington and now living in Stockton on the Forest – it’s important to me that the local business community comes out of the next few transitional months as strong as possible so that the region is in a position to prosper in the long term.

I’m fortunate to have a role to play in the local business community as a partner within the Yorkshire practice of global professional services firm KPMG. Our clients include some of York’s largest and highest profile businesses such as Persimmon, Nestlé and Shepherd Construction, as well as a broad portfolio of the smaller privately-owned businesses which are so vital to the local economy.

Talking to my clients and fellow professionals in the city gives me an insight into how York is coping with the recession. Like several cities in the region, we benefit from a good deal of public sector employment which has worked in our favour so far during the recession. But as public spending faces cuts, there is the risk that the city’s reliance on this sector may mean we face a disproportionately difficult time in terms of both unemployment and spending.

However, on the whole the area’s economy is well balanced with a generous handful of high-quality, nationally recognised companies such as those I mentioned earlier plus CPP, Aviva and Portakabin. Meanwhile, York also boasts a large and varied base of small enterprises which form a resilient and flexible tranche of the market which is also – thanks to the influence of the thriving university – increasingly forward-looking with fast growth spin-out companies in the science and technology sector.

In fact, the university is likely to be a growth stimulus for York as it expands in terms of student numbers and its links with the business community.

Of course, these modern enterprises contrast with the traditional tourism industry for which the city is best known but which by no means dominates the economy. This sector is having to adapt to the downward shift in disposable income, potentially offset to a limited extent by a trend towards domestic rather than overseas holiday breaks.

As business people now return to work after the summer and undertake the planning for the 2010 financial year, they are facing a new agenda, one about the traditional fundamentals of stability, sound funding and efficiency, with growth now on the back seat for a while.

I am hopeful that our economy is over the worst and that the recession is ending, but there are a range of challenging headwinds for the area’s businesses to deal with.

These include the end of the deferral of tax payments by HM Revenue & Customs, the uncertainty of a general election and, conversely, the certainty that whichever party wins there will be lower public spending, while changes to the tax regime may also lie ahead. Funders will continue to focus on cash management while after a period of destocking, many production and retail companies may need to invest in capital or inventory.

I’m advising my clients to produce a plan B and C because in the current environment, plan A may not be enough. This is the time to ensure businesses are focused on the fundamentals, and benefiting from collaborative working with advisers and key stakeholders, to help spot the hazards on the road ahead – of which a good number remain.