Northern SMEs Beat the Downturn


Fewer small firms in the north of Britain are being affected by the economic slowdown than in the south.


Research from Bacs revealed that just 55% of SMEs in the north of Britain say they have been affected by the economic downturn, compared with 59% in the Midlands and 64% in the south.

Commenting on the research, British Chambers of Commerce (BCC) economic adviser David Kern, said:

“There are two reasons for the relatively better performance in the north. The housing downturn has hit the south harder, and the export sector has done better than the domestic economy. More northern companies are involved in the export sector, while businesses in the south tend towards services.”

“However, you can’t argue that the north is booming and the south is in the doldrums. But at this stage in the economic cycle, the south has done relatively less well than the north in weathering the downturn, whereas during the boom the south fared better and has historically been more buoyant.”

Kern added that small businesses need to pay particular attention to their cashflow management.

“Positive cashflow will make them less vulnerable to any pressure from the banks,” he said. “At a time of economic difficulty, the quality of management becomes much more important because you can’t rely on a boom. During a boom, lots of companies do well because there is so much business around, but in the downturn it is much more important to manage your cashflow well, and to know your business well. Even in the downturn there are opportunities for good businesses.”

Bacs managing director Michael Chambers, added:

“Unfortunately, the overall results do seem to mirror what’s being reported more widely. However, it’s good to see that businesses in the north of England and Scotland report that they seem to be weathering the initial storm better.”

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