News

The latest QES results show a significant decline in key economic indicators, with firms citing weakening structural business conditions and confidence as huge causes for concern.

This comes as little surprise in light of events during recent weeks and months, but it paints a real picture for the business community – that firms here in Staffordshire and across the country are caught in the pincer movement of soaring inflation and rising interest rates.

Key findings from the survey include:

• Four in ten businesses believe their profitability will reduce over the next 12 months
• Fewer businesses are reporting increased sales; only 33% of firms reported increased domestic sales, down from 41% last quarter.
• Measures for inflation remain at record highs as 84% of firms say it is a growing concern for them

There has been a sector-wide fall in domestic sales that, coupled with rising inflation, is making for a toxic mix – and businesses must be supported.

Both measures are heading towards levels not seen since the onset of the Covid crisis.

While the energy support packages have alleviated some immediate pressure on firms, confidence has taken a further hit following the market reaction to the mini-budget. The devaluation of the pound has also added a huge cost base for businesses reliant on imports.

Businesses now desperately need to see economic stability in order to rebuild the confidence to invest.

More than ever, it is vital that the Government roll out a long-term plan to support firms of all sizes – and time is certainly of the essence. The Chamber network is making a plea to Government to provide more certainty by bringing forward the publication of their Fiscal Plan. The sooner they do this, the sooner markets and businesses will understand what the long journey to stability looks like.

Our Positive Pathways team are attending the Stoke-on-Trent City Council Aspiration Summit today – helping local job seekers to develop their employability skills while linking employers up with refugees from our Positive Pathways programme.

The free event is a chance to meet some of the city’s top employers and find out more about the jobs they have on offer.

During October, we’re focusing on SDG 8, Decent Work and Economic Growth, and are highlighting the positive impact that this project is having on employment in the local area.

SDG 8 Promotes sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.

Through our Positive Pathways programme, we help to connect refugees who have fled war, violence, conflict or persecution with local employers who are looking to recruit across a number of different sectors.

Many of our participants have now found employment opportunities in the Stoke-on-Trent and Staffordshire area.

Find out more about how your business can help work toward SDG 8, here.

Find out more about Positive Pathways, here.

The BCC’s Quarterly Economic Survey (QES) for Q3 2022 shows a significant decline of key economic indicators, with weakening structural business conditions and confidence a cause for concern.

The QES is the UK’s largest independent survey of business sentiment and a leading indicator of UK GDP growth. The survey took place between August 22 and September 16, prior to the Government’s energy support package for firms and the mini-budget announcement.

The survey of over 5,200 firms – 92% of whom are SMEs – reveals there have been significant declines for indicators of business sales, cashflow, and profit expectations.

All indicators of business conditions and confidence have fallen significantly from Q2 positions.

More businesses are now seeing their cashflow decreasing, instead of increasing.  One in three (32%) firms reported reduced cashflow over the last three months, while 23% reported an increase.

Indicators for business confidence have plummeted; less than half (44%) of firms expect their turnover to increase over the next 12 months, while 25% expect a decrease. Those expecting an increase is down ten percentage points from 54% in Q2.

Profitability confidence has dropped to an even lower level; only one in three (33%) businesses believe their profits will increase over the coming year, while 39% now expect a decrease. This is the lowest level since Q4 2020 at the height of the Covid crisis.

Unsurprisingly, firms are not upping investment in their business. Only 22% reported an increase to plant/equipment investment in the past three months, while 57% reported no change, and 22% reported a decrease.

Business activity is taking a hit, with fewer firms reporting increased sales.

Only 33% of firms reported an increase in domestic sales over the past three months, a sharp decline from the Q2 level of 41%. 24% of firms reported a decrease in sales.

The outlook is particularly bleak for the retail and wholesale sector. The sector is now in its second quarter of negative territory; with far more businesses reporting a decrease in sales rather than an increase. 25% of retail/wholesale firms reported an increase in domestic sales, while 39% reported a decrease.

Alongside the retail and wholesale sector, other sectors are also struggling; almost three-quarters (71%) of hospitality businesses reported they are operating below capacity.

Inflationary pressures are showing no signs of letting up.

The percentage of firms expecting their prices to rise over the coming months (62%) remains close to last quarter’s record high. 84% of firms also cite inflation as a growing concern to their business – by far the highest level on record. A rising proportion (37%) are also worried about interest rates.

Responding to the findings, Sara Williams, Staffordshire Chambers CEO, said: 

“The latest QES results show a significant decline of key economic indicators, with firms siting weaking structural business conditions and confidence as causes for concern.

“This comes as little surprise in light of events during recent weeks and months, but it paints a real picture for the business community – that firms here in Staffordshire and across the country are caught in the pincer movement of soaring inflation and rising interest rates.

“There has been a sector-wide fall in domestic sales that, coupled with rising inflation, is making for a toxic mix – and businesses must be supported.

“Both measures are heading towards levels not seen since the onset of the Covid crisis.

“While the energy support packages have alleviated some immediate pressure on firms, confidence has taken a further hit following the market reaction to the mini-budget. The devaluation of the pound has also added a huge cost base for businesses reliant on imports.

“Businesses now desperately need to see economic stability in order to rebuild the confidence to invest.

“More than ever, it is vital that the Government roll out a long-term plan to support firms of all sizes – and time is certainly of the essence. The Chamber network is making a plea to Government to provide more certainty by bringing forward the publication of their Fiscal Plan. The sooner they do this, the sooner markets and businesses will understand what the long journey to stability will look like.”

Staffordshire Chambers is proud to announce that our Positive Pathways programme has been shortlisted for the Social Inclusion Award at Keele University’s Breaking the Mould Awards 2022.

Also shortlisted for an award is Fiona Miller, Stoke-on-Trent & Staffordshire Growth Hub Marketing Advisor, who has been nominated in the Enterprising Student of the Year category for her work on the Chamber Happy innovation – designed to reunite the team post-pandemic.

The awards will celebrate the businesses, social enterprises and entrepreneurs that are thriving through innovation and making a difference in the world – with the winners set to be announced at the ceremony on 13 October at the University’s Smart Innovation Hub.

Our Positive Pathways programme supports refugees who have fled war, violence, conflict or persecution with employability skills and business start-up advice.

Many of our participants are seeking employment opportunities in the Stoke-on-Trent and Staffordshire area. That’s why we launched a new Chamber initiative in July – to help connect local businesses with refugees who have graduated from our Positive Pathways programme.

Find out more about the initiative and how it’s helping to address local skills shortages, here.