Midlands leaders confident about business growth and general elections – report

Financial services business leaders in the Midlands are confident about business growth for the second quarter of 2024, according to research from KPMG UK.

The quarterly survey of senior executives* working in the sector found that business confidence remains high, building on an optimistic outlook for the first quarter of 2024.

95 per cent are confident when it comes to overall business growth in Q2, with executives feeling ‘quite confident’, followed by who are casting a ‘very confident’ outlook.

Additionally 95 per cent have a confident outlook on profitability for the coming quarter.

The quarterly poll found that 75 per cent have a positive outlook of the UK economy over the next quarter.

The survey also showed that, ahead of the General Election, important policies for Midlands-based financial services firms included green economy ambitions.

The prospect of a general election later this year isn't deterring sector optimism, with over three quarters of leaders feeling positive about a general election for the sector’s future.

Boosting sector competitiveness, improving its regional footprint to drive growth and balancing the benefits and risks of artificial intelligence for the sector were ranked as the most important for leaders when it comes to government policy.

The impact of inflation and interest rates on financial services businesses continues to be reflected in cost challenges. The biggest challenges facing businesses are inflation pressures (50 per cent), interest rates (60 per cent), and attracting and retaining a skilled workforce (40 per cent).

Almost half of leaders plan to make cost savings by reviewing suppliers (45 per cent) and increasing productivity through technology like Generative AI (40 per cent). Over a third (35 per cent) plan to change or downside their real estate footprints and reduce spending in parts of the business in Q2. 

Andrew Bostock (pictured), Birmingham office senior partner said: “The Midlands region has a rich financial services legacy and the sector plays an important role in supporting the region’s wider economy.

“The findings indicate green shoots for the sector; however, the coming months may continue to be challenging for firms of all sizes across the Midlands.

“To ensure long-term success, businesses should focus on boosting productivity through technology investments, effectively responding to regulatory demands, and building sustainable business models.

“These measures will serve as essential drivers of growth and lay a solid foundation for competitiveness as the economy rebounds."

Karim Haji, global and UK head of financial services at KPMG, said: “The start of the year saw renewed growth for the economy and forward-looking indicators point to further signs of recovery, which may well be the reason for continued optimism among leaders in the sector.

“However, while financial services leaders are keeping an optimistic outlook, they do so with caution as costs are still a concern, and the sector continues to eye up savings in response to economic pressures.

“The prospect of a general election isn’t shaking the financial services sector. In fact, most leaders are surprisingly upbeat about it.”