Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Economic indicators are ‘flashing red’ as UK companies face increasing inflationary pressures, a leading business group is warning.
The British Chambers of Commerce said a survey of 5,700 firms showed that measures for investment and longer-term business confidence have slipped back, hitting investment plans.
Confidence in profitability has taken a ‘significant knock’, with 28% of respondents predicting a decrease in profits.
Declining confidence in business performance has affected plans to increase investment, with three in four of those questioned saying they have no plans to do so.
Two thirds of firms said they expect their prices to rise in the next three months, a record high, said the BCC.
Utility bills, labour costs, fuel and raw materials were said to be driving price rises.
David Bharier, head of research at the BCC, said: ‘This quarter's survey results clearly point to a weakening economic outlook amid unprecedented cost pressures and falling business confidence.
‘Domestic demand continues to show buoyancy, with almost half of respondents reporting increased domestic sales in the quarter.
‘However, indicators for structural business conditions such as investment, and cashflow are showing no sign of improvement for most firms.
‘Inflation remains by far and away the top concern, with our survey measures going beyond anything we've seen before in the history of the data.
‘Businesses face an unprecedented convergence of cost pressures, with the main drivers coming from raw materials, fuel, utilities, taxes, and labour.
‘The continuing supply chain crisis, exacerbated by conflict in Ukraine and lockdowns in China, has further compounded this.’
BCC Director General Shevaun Haviland, said: ‘The red lights on our economic dashboard are starting to flash. Nearly every single indicator has seen a deterioration since our last survey in March.
‘Business confidence has taken a significant hit and fears over inflation and cost pressures are at new record highs.
‘It is not too late for the Government to take action to help businesses through these challenging times and put the economy on a more stable footing.
‘A cut in VAT on energy bills to 5%, and other steps to relieve the tax burden on firms to encourage investment are crucial.
‘Better infrastructure, a plan to address labour shortages and a unified long-term economic strategy to give businesses more certainty are also needed.
‘The government must swiftly demonstrate that it is on the side of business if confidence to invest is to be restored.’
By Alan Jones, PA Industrial Correspondent
source: PA
Copyright 2022 Alliance News Limited. All Rights Reserved.