Survey in final quarter of 2022 shows no signs of business revival

The latest results in the British Chambers of Commerce quarterly survey reveals that key indicators have stabilised at worryingingly low levels.
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This follows quarter 3 results that showed a signifcant decline in structural business conditions weakened and confidence.

The latest findings are derived from 5,600 firms – 92 per cent being small and medium enterprises which indicates that business confidence, conditions and sales have now all stabilised, albeit at low levels. Inflation still remains as the top external factor of concern.

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The research took place across the period that the Government’s Autumn Statement was announced between November 7 and November 30 and showed that business activity wasn’t experiencing any bounce-back from the previous quarters falls.

The decline in key economic indicators has slowed but has plateaued at a worryingly low levelThe decline in key economic indicators has slowed but has plateaued at a worryingly low level
The decline in key economic indicators has slowed but has plateaued at a worryingly low level

Just 33 per cent of firms experienced an increase in sales over the last three months, as 25 per cent recorded a decrease and 42 per cent reported no change.

David Bharier, Head of Research at the British Chambers of Commerce (BCC), said: “These results provide further confirmation that business conditions deteriorated significantly in the second half of 2022.

“The situation remains critical for the majority of SMEs who find themselves cut adrift by monumental inflationary pressures, often driving triple-digit percentage cost increases, particularly on energy."

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Hospitality and retail sectors remains particularly weak as both are firmly in the ‘negative territory’ as more businesses report a decrease in sales.

Further issues within the hospitality industry is that 74 per cent of operations in this sector are said to be operating below capacity.

After confidence plummeted in the previous quarterly assessment, the negative outlook continued into Q4 as less than half (44 per cent) expect their turnover to increase in the next 12 months. The total being ten percentage points down from the 54 per cent in Q2 of the same year.

Only one in three businesses believes their profits will increase over the coming year, while 36 per cent now expect a decrease. Profability confidence remains considerably less than turnover confidence and has stabilised at a level similar to what it was during the Covid-crisis.

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Mr Bahrier said: “Business confidence remains worryingly low, with only a third of firms reporting improvements to sales, and less than a quarter reporting increased investment. The widespread economic damage caused by Covid shutdowns has been compounded by subsequent inflation, global trade crises, and new trade barriers with the EU. For many SMEs, the cost of doing business is now simply too high.”

Increases to business investment remain low, as just 21 per cent of firms report an increase to plant/equipment investment over the past three months. Some 22 per cent declared a decrease while 57 per cent confirmed there to be no change.

Concern about inflation also remains at record highs; 80 per cent of firms cited inflation as a growing worry to their business. But there are also significant jumps in the percentage of companies concerned about taxation (38 per cent) and interest rates (43).

Mr Bharier added: “These results reaffirm the need to create a stable environment for businesses to invest, with energy, improvements to infrastructure, access to skills, and removal of trade barriers, particularly with the EU, all top priorities for firms.”