Falling sales, orders, investment and profit expectations have been reported by the region’s businesses in East Midlands Chamber’s latest Quarterly Economic Survey.
Confidence in making profit has dropped by 38% over the last quarter, and turnover expectations are down 31%. A minority of East Midlands businesses (36%) said they expect profit to improve over the next three months.
In the Q4 survey, 30% of businesses reported a drop in UK sales, up from 23% in the previous Quarterly Economic Survey, while more than a third (34%) saw a drop in UK orders. Internationally, the story is similar, with 27% of businesses experiencing a drop in overseas sales and 33% reporting a drop in orders. These 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 attempting to recruit. Concern over corporate taxation, inflation and business rates has risen to the top of the worries reported by the region’s businesses.
The survey, which took place over a four-week period in November, measures a combination of sentiment and measurable data. It is a key indicator of the 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 experiences. 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. What we don’t know, at this stage, is whether this will be a sustained trend going forward or a knee-jerk reaction following the Autumn Budget. We heard National Insurance contributions for businesses would rise to 15% from next April, the payment threshold would drop, and the national minimum wage would 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. However, with the overarching picture showing the extent of the downturn in confidence and experience across so many measures, it’s absolutely essential that political leaders prioritise supportive measures for businesses in the East Midlands.”
