Soaring costs force firms to increase prices - Chamber

A bleak picture for the fortunes of regional businesses is revealed in the latest data released by Greater Birmingham Chambers of Commerce (GBCC) with a record number expecting to increase their prices.

Even before the financial upheaval in late September, the proportion of firms experiencing an increase in domestic sales fell by seven per cent to 41 per cent and exports dropped by nine per cent to 25 per cent.

Only 50 per cent of firms were operating at full capacity and 52 per cent have attempted recruitment over the last three months, of which 71 per cent experienced difficulties (five per cent lower than last quarter).

Cashflow increased for only 21 per cent of firms, a 10 per cent drop compared with the previous quarter

Only 20 per cent of firms reported an increase in capital expenditure investment and 23 per cent in training investment.

Fifty-two per cent said they were expecting turnover to increase in the next 12 months (59 per cent previous quarter) and 40 per cent were confident that profitability would increase in the same timeframe (49 per cent last quarter)

Just over half (55 per cent) are expecting to increase their prices over the next three months, only one per cent lower than last quarter and the second highest figure on record. The most popular reasons for price increases were utilities (31 per cent) and labour costs (30 per cent).

Of the concerns raised during the survey, 40 per cent were in relation to inflation - a slight drop compared to last quarter (41 per cent).

GBCC policy adviser Erin Henwood (pictured) said: “The bleak Q3 Quarterly Business Report results are unsurprising given the economic challenges facing the country: inflation has hit a 40-year high, energy costs are spiralling out of control, and the Bank of England predicts that the economy will enter recession before 2023.

“Indeed, 55 per cent of firms are anticipating having to increase their prices over the next three months, citing high energy bills and skyrocketing overheads as their main cause for concern.

“It is imperative that the Government heeds the calls of businesses in desperate need of meaningful intervention. The recent Plan for Growth outlined a range of measures that, while ambitious in their intent, failed to recognise the support needed for small and medium-sized businesses.

“With the Bank of England working to stabilise the market, all eyes are now on the Government to provide much-needed reassurance for firms in all corners of the country to ensure we drive entrepreneurial spirit and foster economic growth. ”