The British Chambers of Commerce’s Quarterly Economic Survey for Q1 received over 5,600 responses. As the UK’s largest independent economic survey, the QES highlights the common issues faced by the business community on a national level and supports Chambers across the network to be the voice of the business community, as well as helping to shape and influence policy thinking with the information provided.
In Quarter 1, more than 77% of firms surveyed cited inflation as a concern for their business, whilst 62% of firms also stated that they expect to raise prices, which is an increase from 58% in Q4 2021. This figure increased to 75% for production and manufacturing firms as well as firms in the retail sector. The results from the survey have demonstrated the rising inflationary pressures on firms reaching the highest they have been in 33 years, and this has caused the cost of business to increase significantly meaning that more firms are likely to see their cash flow weaken.
92% of manufacturing companies have cited that the increasing cost of raw materials has led to the subsequent increase in their prices. However, other firms have also noted that the energy and fuel costs, as well as finance costs, have played a significant role in the lead up to the firm increasing their prices.
In Q1, only 42% of firms reported an overall increase in domestic sales which is a decrease from the previous 45% which was reported in Q4 2021. In Q4 of 2021, 16% of firms reported a decrease in their domestic sales, this figure has increased to 18% in Q1 of 2022. Despite firms in the services sector reporting a decrease of 5% in domestic sales compared to Q4 2021, firms in the manufacturing sector have reported an increase of 2% in domestic sales compared to Q4 2021.
Sara Williams, CEO of Staffordshire Chambers of Commerce, said: “The results from the survey of Quarter 1 of 2022 have highlighted the huge amounts of financial stress that businesses are under. With soaring inflationary pressures reaching record highs, firms are facing cost increases from all angles, ranging from energy bills and raw material prices as well as the rise in National Insurance.
“It was disappointing to see the Chancellor miss the opportunity to reduce the cost of doing business in his Spring Statement. We have continued to urge Government to provide urgent financial support to SMEs in particular, by expanding the energy bills rebate scheme as well as introducing an SME energy price cap to protect smaller firms from the price increases.”
It is also important to note the relevance of Russia’s invasion of Ukraine which has raised the risk of a renewed economic downturn, further aggravating the financial squeeze on businesses and households. It is now more important than ever that businesses are provided the right support in order to ensure businesses have greater resilience to get through the uncertain times ahead.
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