In the largest business sentiment survey since October’s Budget, the British Chambers of Commerce’s (BCC’s) Quarterly Economic Survey, shows that tax has become the greatest concern for Norfolk based businesses.
Following the Chancellor’s autumn statement, three quarters (75%) of Norfolk firms now cite tax, including National Insurance, as their biggest worry, marking a significant increase from the 53% that raised this same concern in the previous Q3 survey.
Nationally, tax is a growing issue with 63% of businesses highlighting it as their greatest challenge. This is the highest level recorded since tax concerns were first included in the survey in 2017. By comparison, the previous quarter recorded concerns from 53% of Norfolk based businesses and 49% nationally.
Here are the main highlights of Q4’s business survey:
·75% of Norfolk businesses say tax, including national insurance, is now a concern, following the Chancellor’s Budget – the highest level since 2017.
· Business confidence has slipped to its lowest level since the aftermath of the mini-Budget in Autumn 2022.
· Most organisations (45%) now expect prices to go up in the next three months, with labour costs by far the biggest driver.
· Only 25% of businesses have increased investment in the past three months – 26% have decreased.
· Business conditions are weak, with only 25% of firms reporting increased cashflow and 20% a decrease.
· Nearly half (45%) of responding firms in our county say they expect to raise their prices in the next three months, compared with 43% in Q3. The survey also showed that business confidence in Norfolk has declined significantly with just 44% of responding companies expecting their turnover to increase in the next 12 months, compared with 49% nationally. Across the country confidence levels are lowest in the retail and hospitality sectors (39% and 42% respectively).
Tax now the top concern for organisations
As we’ve seen, tax is now the top concern for businesses nationwide and the levels in certain sectors are higher, with 72% of production and manufacturing firms, and 68% of construction and engineering businesses raising it as a concern.
Concern about inflation among Norfolk’s businesses remains broadly similar to the national picture – 48% compared to 47%. This is only a slight increase on the 46% reported last quarter. Worry about interest rates has fallen slightly to 25% (27% in Q3).
Business confidence hit by Budget measures
There has been a significant drop in business confidence since the Chancellor’s statement. Only 44% of firms say they expect their turnover to increase in the next twelve months, down from 49% in Q3. This is the lowest figure since the aftermath of the ‘mini budget’ in late 2022. Over a third (35%) of businesses expect turnover to worsen, up from just 19% in Q3, and 37% expect no change.
Profitability confidence has also been hit with only 35% of Norfolk firms expecting profits to increase over the next year (38% in Q3), while 30% of businesses expect them to fall.
More businesses expecting to raise prices
Labour continues to be the main cost pressure for firms – but the issue is now raised by 91% of businesses, up from 85% in Q3. This is consistently higher than the national average, potentially reflecting the over-exposure to challenges in hospitality and tourism we consistently see in Norfolk.
Fewer firms have increased investment plans
Only 25% of Norfolk businesses say they have increased investment plans over the last quarter, down from 29% in Q3. 26% of firms say they have cut back investment plans, a rise from the Q3 figure of 25%. 46% of businesses say their plans have remained the same. Whilst this isn’t hugely encouraging, the figures are less concerning when compared to the national average which shows yet again the resilience of Norfolk’s business community.
The issue is more marked in certain sectors though, with 42% of retail and hospitality firms reporting a scaling back of investment.
Business conditions struggle
The percentage of respondents reporting increased domestic sales has fallen slightly from 24% in Q3 down to 22% this quarter. 52% reported no change and 23% of firms said they had seen a decrease in sales.
Nationwide, retailers were the most likely to have seen a fall in sales (36%) followed by manufacturers (33%).
What Norfolk Chambers members say
Rebecca Houston of Smash Marketing says “Times are hard, and budgets are tight, but history shows us that the businesses who increase their marketing efforts will come out on top. There are lots of things companies can do themselves like updating their websites, emailing their existing database and consistently posting on social media channels.”
Shevaun Haviland, Director General of the British Chambers of Commerce said:
“The worrying reverberations of the Budget are clear to see in our survey data. Businesses confidence has slumped in a pressure cooker of rising costs and taxes.
“Firms of all shapes and sizes are telling us the national insurance hike is particularly damaging. Businesses are already cutting back on investment and say they will have to put up prices in the coming months. The Government is rightly coming up with long-term strategies on industry, infrastructure and trade. But those plans won’t help businesses struggling now.
“Business stands ready to work in partnership to make the proposed Employment Rights legislation work for all, but the current plans will add further costs on firms.
“To help business we need to see quick action in three specific areas. Firstly, ministers should accelerate business rate reform to create a system that incentives investment. We also need the Government to speed up infrastructure investment, to help SMEs in supply chains across the country. Finally, it’s crucial to support exports, prioritising a better trading deal with the European Union.
“Without urgent Government action to ease the pain on businesses, the challenging economic landscape will get worse before it gets better.”
Jack Weaver, Chief Operating Officer at Norfolk Chambers of Commerce said:
“This dataset is a clear signal that business sentiment has been significantly impacted following recent policy announcements, notably national insurance increases. Taxation is now by far the biggest concern. As ever though, the picture in Norfolk is more nuanced. Businesses in the hospitality and tourism sector consistently feel least confident about the future with entrenched concerns about skills, recruitment, staff retention and investment.
“Confidence has now dipped to 2022 levels, with less than half of firms expecting improved turnover over the next year and over a third now expecting it to worsen.
“Faced with rising costs, our survey paints a difficult picture and shows businesses are having to make some very difficult decisions. Many of our members tell us they expect to push up prices and cut back on investment and the BCC expect this to lead to a low or no-growth economic climate in the coming months. Whilst the feedback is not universally negative, it certainly isn’t positive. We want to see this new government come forward with some olive branches through the upcoming spending review, and through a renewed Norfolk devolution deal to show that they are serious about working with business to grow our economy.”
ENDS
Notes to editor
The QES survey was conducted by the British Chambers of Commerce to nearly 5,000 respondents between 11th November and 9th December.
Press contact: adam.cracknell@norfolkchambers.co.uk
About the Norfolk Chambers of Commerce
The Norfolk Chambers is a not-for-profit independent business and is one of 53 accredited Chambers by the British Chambers of Commerce.
We are a business membership organisation, from start-up businesses, small and medium enterprises, and on to global brands, the Norfolk Chambers of Commerce embraces and represents the County’s business community.
We provide networking opportunities, share knowledge, offer business services, signpost to business opportunities and inspire innovative thinking to enable companies to do better business. Our voice is your voice, amplified through established connections, to ensure that politicians both local and in Westminster are focussed on creating and enhancing the conditions that are most conducive for economic growth in our region. The Chamber’s long track record of 126 years and our diverse membership, make us the pre-eminent network and one of the most respected voices of business in Norfolk.