• Swindon & Wiltshire News
• Wednesday July 19 2023
• Author Name: Peter Davison

No signs of a sustained improvement in business confidence in Thames Valley, economic survey shows

Inflationary pressures show signs of abating but there are still no signs of a sustained improvement in the confidence in the Thames Valley, according to the results of the latest Chamber of Commerce Quarterly Economic Survey, published today (Wednesday).

The regional results of the national British Chambers of Commerce Quarterly Economic Survey, released by Thames Valley Chamber of Commerce, show a rise in interest rates and the cost of borrowing are still holding back SMEs in the region.

Inflation was the number 1 issue cited by respondents as one of the top three factors affecting their business, at 75 per cent. Just under half (47 per cent) cited interest rates, and 28 per cent mentioned business rates.

Price pressures continued to hit businesses in the last quarter: 65 per cent cited payment settlements, 63 per cent mentioned utilities costs, and 40 per cent mentioned raw material prices

The price of fuel (27 per cent), finance costs (30 per cent), and other overheads were also an issue for the region’s business owners.

When Chamber members were asked whether UK sales had increased during the second quarter, fewer than half (48 per cent) responded in the positive. UK orders were only up for 39 per cent of respondents.

For exporters, 32 per cent and 31 per cent of respondents respectively reported an increase in overseas sales and orders.

Only 35 per cent said cash flow had increased in their businesses and investment is sluggish – 27 per cent had increased investment in plant and machinery, while 35 per cent said investment in training had increased.

Looking to the next 12 months, 73 per cent said they expected turnover to increase, but only 45 per cent said they expected profitability to improve.

Paul Britton, CEO of Thames Valley Chamber of Commerce, said: “The results of the Q2 survey reflect that we are not yet seeing a sustained improvement in the confidence of business- es to invest and a continuing divergence in business indicators for business sectors such as hospitality and retail.

“SMEs in particular are facing further pressures following interest rate rises, and subsequently borrowing rates increase.

“Inflationary pressures show signs of abating; however, it is crucial for the Government and the Bank of England carefully consider the findings of this research which highlight the persistent concerns surrounding labour costs which have now overtaken raw materials and utilities as the primary concern amongst rising costs.

“Additionally, upcoming alterations in trade with the EU, involving the introduction of new customs prerequisites and import levies will amplify the inflationary impact on prices.

“We must exercise prudence in introducing additional expenses on businesses, particularly when they are already grappling with these substantial challenges.”

The local figures will be fed into the national Quarterly Business Survey from the British Chambers of Commerce – Britain’s biggest and longest-running private business survey.

The survey, a leading indicator, often picks up changes in the economy long before other surveys and official statistics and consistently mirrors trends in official data. It remains closely watched by both UK Government and the Bank of England.