Turnover and profit growth has moved ahead strongly at East of England businesses in the fourth quarter and firms are finding access to capital becoming easier. But they have lowered expectations for 2011, says the latest ICAEW/Grant Thornton UK business confidence monitor.

The survey says annual turnover growth in the region rose from 0.5 per cent in the third quarter to 3.0 per cent in the fourth, while annual gross profit growth doubled to 2.8 per cent.

But the survey says the outlook for the region’s firms softened in the fourth quarter. A fall of 13.3 points in the monitor in the fourth quarter suggests growth will be slower than forecast, with companies in the region reluctant to invest.

Expected turnover growth next year has fallen from 5.3 per cent o 4.3 in, while expected gross profit growth has declined from 5.4 per cent to 4.5 per cent.  It is the second quarter running that forecasts have weakened. The impact of government spending cuts on the region for the next four years is likely to have been a factor.

The proportion of businesses reporting access to capital to be tougher than a year ago has fallen from 37 per cent a year ago to 19 per cent today. For the first time since the beginning of 2009, businesses in the East of England have reported that the number of employees grew over the last 12 months, albeit fractionally.

Firms have a large pool of unemployed management-level staff to hire from. Only 2 per cent of businesses in the region report that the availability of management skills is a greater challenge than a year ago. Only 6 per cent of report skilled labour shortages, compared to 21 per cent three years ago.  And firms report only 0.2 per cent annual average total salary growth over the past year.

Richard Proctor, office managing partner at Grant Thornton for East Anglia, said: “Many businesses in the region are continuing to benefit from low interest rates and a greater pool of unemployed people who are available in the labour market. The relative weakness of sterling has helped the region's exporters but can also lead to rising costs. The latest data confirms that the recovery in the East of England remains fragile.”