Falling sales, orders, investment and profit expectation have been reported by the region’s businesses in East Midlands Chamber’s latest Quarterly Economic Survey.
Confidence in making profit has dropped 38% over the last quarter and turnover expectation is down 31%. A minority of East Midlands businesses (36%) said they expect profit to improve over the next three months.
30% of businesses in the Q4 survey reported a drop in UK sales, up from 23% in the last Quarterly Economic Survey, while more than a third (34%) saw a drop in UK orders.
Internationally, the story is similar with 27% of businesses having experienced a drop in overseas sales and 33% reporting a drop in orders. The figures have risen sharply since the last Quarterly Economic Survey was published.
On price pressure, the majority of businesses (56%) said they expect to increase their prices, with labour costs cited as the main driver. On recruitment, most businesses that attempted to recruit (72%) struggled to find the right candidate, while there was a 9% drop over the last quarter in those that had attempted to recruit.
Concern over corporate taxation, inflation and business rates have risen to the top of worries reported by the region’s businesses.
The survey, which took place over a 4-week period in November, measures a combination of sentiment and measurable data and is a key indicator of challenges and opportunities faced by businesses across multiple sectors, highlighting their concerns and the level of confidence they have for the months ahead.
East Midlands Chamber Director of Policy and Insight Richard Blackmore said: “These findings paint a difficult picture for East Midlands businesses right across the board – from sales to price pressure, recruitment to the level of confidence in profit and turnover, with all key indicators showing notable decline.
“If we break down what’s going on, it’s clear several headwinds are at work, impacting expectations and experience. Weakness in demand is driving a drop in sales and orders in the UK and internationally, while we’re seeing a pattern of protective measures creeping in as businesses seek to contain their cost base.
“That’s demonstrated by things like a pullback on intended investment in plant, machinery and training.
“This stall in investment intention is further underlined by a dip in recruitment. On one hand we have the skills gap making hiring the right candidate difficult, but seeing a 9% drop in businesses attempting to recruit in the first place is a concern.
“That suggests businesses are, for now, hitting the pause button on hiring as another protective layer, but what we don’t know, at this stage, is whether this will be a sustained trend going forward or is a knee-jerk following the Autumn Budget.
“We heard NI contributions for businesses would rise to 15% from next April, the threshold for payment drop and the national minimum wage increase. The emerging picture in the East Midlands is a widespread tightening of the belt and it’s telling that labour costs were reported as the greatest force behind price pressure.
“There are signs of resilience within the findings of the survey, with 60% of businesses expecting to hold steady on investment intentions in plant, machinery and equipment, for example, but with the overarching picture showing the extent of downturn in confidence and experience across so many measures, it’s absolutely essential that political leaders prioritise supportive measures for business in the East Midlands.”
