Inflation rises in UK as cost burdens loom for business: BCC Q3 survey

Small and medium enterprises (SMEs) comprise 91 per cent of the survey respondents.

Overall, 35 per cent of respondents reported an increase in domestic sales in the last three months, while 21 per cent reported a decrease. This is a slight worsening compared to previous quarters.

Confidence that turnover will grow in the next 12 months has also ticked down to 56 per cent from 58 per cent in Q2.

Overall, 23 per cent of respondents reported an increase to plant/equipment investment in the last three months, while 59 per cent reported no change, and 18 per cent reported a decrease.

There are wide sectoral disparities; 21 per cent of retail firms report a decrease in investment, while 30 per cent of production and manufacturing firms have seen an increase.

The percentage of firms expecting their prices to rise drops to 39 per cent, the same as in the previous quarter, a BCC release said.

Forty-eight per cent of responding firms say taxation is now more of a concern than three months ago, compared with 36 per cent of businesses in Q2. Concern about other external issues continues to ease. Forty-six per cent of firms say they are more worried about inflation compared to last quarter (49 per cent in Q2 2024 and 82 per cent in Q2 2022).

“On the domestic front, many businesses are increasingly anxious about the direction of economic policy, and taxation has now become their primary concern. The major escalations in the Middle East conflict will also be a significant factor. Investment levels remain the Achilles heel of the UK economy,” David Bharier, head of BCC research, said.

“Despite interest rates starting to fall and inflation easing, most SMEs are still hesitant to invest. Further interest rate cuts in the coming months will help alleviate borrowing costs, but SMEs will need support to take on the skills and technologies that will help boost productivity,” he added.

Fibre2Fashion News Desk (DS)