Confidence is up but inflation still worrying firms
NORTH East businesses are feeling more confident about the state of the economy but remain concerned about inflation and other price pressures, a new survey suggests.
The Quarterly Economic Survey (QES) from the North East Chamber of Commerce highlights an overall decrease in business concerns, but outlines how business rates, energy prices and staff costs have all increased as areas of unease since the end of last year.
The survey shows that fewer businesses in the region are exporting either goods or services, while labour costs and the price of raw materials are continuing to weigh on some companies.
But it also pointed to an easing in hiring difficulties, while 41.5% of businesses polled said they were operating at full capacity, a small improvement on the previous quarter.
The Chamber said that its survey provides a key insight into the “mixed picture” of the regional economy ahead of May’s local and mayoral elections.
Andrew Haigh, president of the Chamber, said: “It is fair to say that we have seen a mixed picture in the latest set of QES results.
“Headline inflation is coming down, but we are continuing to see price pressures in fuel and raw material prices. It is also clear that firms continue to experience challenges when it comes to exporting goods and services.
“It is, of course, welcome news that the percentage of firms reporting working at full capacity is on the rise, albeit with modest increases.
“Areas of concern are also generally continuing a downward trend, although there are some exceptions, including worries about business rates starting to increase.
“These results are a reminder of how much work is needed to drive a thriving economy and support its engine.
“With the local and regional elections fast approaching, along with a general election likely before the end of the year, we remain hopeful for policies for the long term, to help build business confidence.”
The survey also highlights fiveyear trends in the region for sales, investment and workforce numbers, all of which show significant volatility.
“Looking over a five year period, it’s no surprise that there have been some significant peaks and troughs across indicators of business health including sales, investment and workforce strength,” according to the Chamber of Commerce president.
“It is clear from the data how significant some ‘once in a lifetime’ events have been for business, especially in terms of the time taken to recover from the effects of Covid, Brexit and the Russo-Ukraine war.
“All these events continue to impact the economy in some form, whether that be fuel-related issues and costs, access to staff or the cost of finance.
“This is driving the ongoing inflationary pressures and impacts we see across the QES picture for Q1 2024.”