More than half of region’s firms predict price rises, says Thames Valley Chamber of Commerce

QES sq

Well over half (58 per cent) of the businesses in the Thames Valley expect their prices to go up in the next three months, according to figures released by Thames Valley Chamber of Commerce.

And one in four (27 per cent) of businesses that responded to the British Chambers of Commerce‘s Quarterly Economic Survey said they were worried about rising interest rates.

Inflation was listed as the top concern for businesses, while a rise in the interest rate was also a cause for concern for many.

The regional results of the national survey – the UK’s longest-running survey of business sentiment – were presented at an online briefing on Tuesday (January 11).

David Bharier, head of research at the British Chambers of Commerce, said businesses faced a double whammy of “unprecedented inflationary pressures” and “unprecedented skills shortages”.

“More firms (45 per cent) are reporting an increase in domestic sales,” he said, “but export sales, cash flow, and investment continue to show no sign of recovery.”

When asked what was more of a concern to their business than three months ago, 66 per cent of firms overall cited inflation, compared to 52 per cent in Q3 and 25 per cent in Q4 2020 – the highest on record.

For production and manufacturing firms, this rose to 75 per cent.

The percentage citing interest rates as a concern rose in the quarter. One in four firms (27 per cent) reported interest rates as a concern, up from 19 per cent in Q3.

Recruitment issues continued to be a “disrupting factor” for many Thames Valley businesses, he said, with a massive 79 per cent of firms reporting problems in recruiting new talent caused by Brexit and Covid.

The highest numbers were in hospitality, manufacturing, and transportation and distribution, but “no sector is immune,” he warned.

When it came to cash flow, 31 per cent of respondents reported an improvement, while almost half (46 per cent) reported no change, and 23 per cent reported a decrease.

However, said David, the survey was completed before the emergence on the Omicron strain of the virus. The figures for Q1 of 2022, he suggested, were likely to be far worse, especially in sectors like hospitality, retail, and construction.

The briefing also heard from Danny Dartnaill, business restructuring partner responsible for the Reading office of business advisory firm BDO, who predicted that 2022 would start to see more insolvencies as government interventions were reigned back.

He said businesses would have to trade profit margins for flexibility: holding more stock and choosing short-term over long-term property rentals.

His prediction for 2022 was “cautious optimism tempered by inflation and supply chain problems.”

And Uma Kambhampati, professor of economics at the University of Reading, said the perfect storm of the pandemic and Brexit had led to supply chain issues, while those issues and the government’s immigration policies had led to labour market shortages.

Meanwhile, climate change – and the policies needed to tackle the climate crisis – would cause problems in the future for industries that had already “taken a knock” from Covid: travel, tourism, and hospitality.

“Recovery is fragile,” she warned.

The Quarterly Business Survey (QES) is established as Britain’s biggest and longest-running private business survey and has provided data since 1989. 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 the UK Government and the Bank of England.