Business confidence has taken a nosedive
CONFIDENCE among East Midlands firms is rapidly declining amid a flat UK market, rising inflation and increases in costs for energy, raw materials and staff, research shows.
East Midlands Chamber’s Quarterly Economic Survey (QES), which gauges the health of the region’s economy, found that only a net 8% of companies in the region expect profitability to increase over the coming year, down from a net 31% at the start of the year.
A net 42% of those surveyed during the second quarter of 2022 anticipate turnover to improve, down from a net 62% in the previous quarter.
The findings, from a questionnaire filled out by 322 businesses across Derbyshire, Leicestershire and Nottinghamshire between 16 May 16 and June 10, show that the low confidence stems from weakening overseas sales and orders, alongside a flat UK market.
These issues are driven by spiralling inflation and costs for energy, raw materials, people and fuel – and are now affecting business investment, which is crucial to driving the productivity gains that can help to beat inflation.
Chris Hobson, (pictured), director of policy and external affairs at East Midlands Chamber, said: “Issues with supply chains – which have been re-adjusting since the pandemic impact and surging demand as we emerge into this post-pandemic period – alongside changes in trading conditions resulting from the UK leaving the EU and, more recently, the impact on prices following the Russian invasion of Ukraine, have all combined to hit business confidence and activity levels.
“This dent to confidence has knock-on effects on investment, with intentions to invest in training (down 3% quarter-on-quarter) and equipment (down 6%) both being scaled back, and at a time where 40% of businesses report operating at full capacity – a record for the sur- vey in recent times.
“The underlying concern here is, for an economy to grow, businesses need to invest. A struggling economy isn’t being driven by a lack of demand, but rather a hindered ability to respond to that demand.
This in turn puts further pressure on prices, risking a situation that continues to deteriorate as the months progress.”
There are calls for the Govern- ment to address how it supports businesses.
Mr Hobson said: “Businesses need an injection of confidence to enhance their investment plans and respond to the challenges they’re facing.
“Given that many of these issues are external, this is easier said than done, but there are levers the Gov- ernment can pull to support busi- ness.
On fuel, it should act to further cut duty and reduce VAT applied to fuel purchases, while the HMRC mileage rate should be increased from 45p per mile to 60p. “Small businesses should be offered greater grant support on fuel bills, similar to that received by consumers, and those struggling with repayments linked to coronavirus-associated support schemes should be given more leeway for repayments to be made.
“Finally, incentives should be giventobusinesseslookingtoinvest in their people, similar to schemes that already exist for capital investment, which themselves should be extended.
“These are not usual times, but the current state of affairs is also not permanent. It is right that Government should act to introduce special measures at a time when the economy needs it, with the knowledge that once there are calmer waters ahead, businesses will continue on their growth trajectories and drive a competitive UK economy.”
Small businesses should be offered greater grant support on fuel bills, similar to that received by consumers
A BUSINESS springboard scheme has seen East Staffordshire Borough Council pledge £25,000 to growing firms.
The grant fund scheme is designed to help businesses grow, and since its introduction it has seen a large number of inquiries from small and growing businesses in the area.
Cllr George Allen, leader of the council, said: “It is really encouraging to see just how many local businesses have taken interest in this scheme. A lot of businesses suffered over the pandemic so I’m really glad a scheme like this is available to help those businesses recover and grow after Covid.”
The Dial Restaurant in Burton is one example of an applicant whose bid for a grant was successful.
James Weeks from the Dial said: “The business springboard grant has been fantastic for The Dial because it has enabled us to introduce the very latest cooking technology to our kitchen. One of the big challenges with a full fresh food menu is being able to handl increased volume with complex dishes. This equipment has given our chefs the freedom to remove barriers with menu development, improved our efficiency and enabled the operation to run more smoothly at peak times. The chef brigade are focused on making the very most of this investment and the opportunities that it gives to grow their skills.”
Applications are still being taken for the grant, with businesses having until Monday, July 18, to apply for the next round of the scheme.
It is important to note that applications are dealt with on a first come first served basis, so the council urges businesses considering applying to submit their application plus supporting documents as soon as they can.
Further information, along with an application form, can be found at https://www.eaststaffsbc.gov.uk/business-and-investment/businessspringboard