The Falklands Business Climate Survey strongly suggests that 2014 and 2015 were two very good years for the Islands economy and its business community, which translated in profits and higher levels of turnover, particularly 2015. However survey respondents predictions for this year and onwards aren't as rosy with many businesses anticipating lower turnover and investments, but not necessarily profits, while the overall average rating for the Islands' economy weighed between “average” and “good”.
The Business Climate Survey (2016) is an undertaking from the Falklands Islands Development Corporation, FIDC, with support from the Falklands Chamber of Commerce (since 2012) and on this occasion have added the Rural Business Association. The two-year survey provides a secure and confidential avenue for the Falkland Islands business community to provide vital feedback to FIDC, business associations and the business community itself. The results of the survey shape the FIDC Business Plan and provide justification for new projects, initiatives and schemes.
The survey which took place during the four weeks of last April was distributed directly to businesses and business associations to ensure as many businesses as possible had the opportunity to complete the survey.
Since filling the survey is voluntary the return rate becomes crucial, and for this edition the return rate was 43%, the highest response rate FIDC has ever received for the Business Climate Survey.
The conclusion of the 68 page report indicates that results strongly suggest 2014 and 2015 were two very good years for the Falkland Islands and its business community. A total of 68% of respondents rated 2014 as a better year for the Falklands’ economy than 2013, and another 69% felt 2015 was even better than 2014. This translated in a high proportion of businesses enjoying improved performances, particularly in 2015. This is highlighted in the high number of businesses making a profit in 2014 and 2015 and experiencing higher levels of turnover. This also meant investment increased, particularly in 2015, and, on average, businesses spent £23,000 on research and development in the same year.
Despite the high performing years of 2014 and 2015, the predictions made by respondents of the survey for 2016 and onwards aren’t as rosy. The number of businesses predicting improved overall performances in 2016 decreased when compared to businesses that stated their performance improved in 2015 from 2014. The number of businesses forecasting an increase in turnover and investment levels decreases in number. However, in spite of these forecasts the number of businesses predicting to make a profit increase.
Also, businesses predict the economy to worsen in 2016 when compared to 2015. Respondents collectively provided a weighted average of 3.75 and 3.94 out of five for 2014 and 2015 respectively. However, the same respondents provide a weighted average of 2.51 for 2016. This reduction in the weighted average is driven by an additional 45 businesses predicting the economy to perform ‘Slightly Worse’ in 2016. However, businesses provided a weighted average of 3.55 out of five for the medium to long-term prospects of the Falklands’ economy, which can be interpreted as between the ‘Average’ and ‘Good’ ratings. The results of the survey to be held in 2018 will be interesting, mainly to see if businesses and the Falklands’ economy perform comparatively worse as respondents predict.
The results of this edition of the Business Climate Survey also raised a number of other interesting issues, including the identification of a new a major barrier to business growth, the forecasted reduction in the total number of jobs in 2016 and the high number of businesses wishing to provide goods and services to MPC. ‘Shortage of Skilled Labour’ is now considered the largest barrier to business growth and innovation.
This has been identified by businesses as a barrier to growth in the 2012 and 2014 editions of the survey and is now much more prominent. FIDC will discuss this issue with stakeholders to identify a way to address the barrier.
As to innovation in the Falklands, it made for very interesting reading. Innovation has become a priority for FIDC in recent months and will be one of the main objectives for FIDC in the coming years. FIDC’s work has led to the Executive Council approval of the Innovation Strategy and a potentially successful funding application to the EU for an innovation pilot project. The results are particularly important as they will provide a benchmark for innovation in the Falklands to ensure progress made with the strategy can be measured. This will be a key aspect of the project to ensure the strategy and the pilot project is delivering tangible results for the Falklands and its business community.
FIDC considers the 2016 edition of the Business Climate Survey as a success. FIDC welcomed a new survey partner in the form of the RBA, the use of Survey Monkey proved successful and the response rate increased. However, FIDC, will be looking for ways to improve the Business Climate Survey for 2018.
The results reports was authored by Michael Betts, FIDC Business Relations Manager and Alexander McShane; FIDC Development Assistant.