The BCC’s Quarterly Economic Survey – the UK’s largest and longest-running independent business survey – shows most businesses reporting no improvement in investment levels, sales or cashflow in the first quarter of 2024.

After a slight rise in Q4, levels of business confidence have remained static. For the second quarter in a row, 56% of businesses say they are expecting an increase in turnover over the next year.

With inflation likely to remain volatile over the coming months – the data also reveals that more businesses expect hikes in their own prices, with staffing costs being the main pressure.

The survey, conducted between 12 February and 12 March, of over 4,800 businesses across the UK – 92% of whom are SMEs (fewer than 250 employees) – also reveals business performance across different sectors varies considerably.

Summary

• No overall improvement in business conditions in Q1 2024 as measured by investment, sales and cashflow.
• Levels of business confidence remain unchanged, with 56% of UK businesses expecting an increase in turnover in the next twelve months.
• Almost half of businesses are expecting the price of their goods or services to rise.
• Interest rates continue to slowly decline as a concern for businesses.
• Hospitality sector continues to struggle disproportionately, with 39% of these businesses reporting a decrease in their cash flow, compared with 28% of respondents overall.

No improvement in overall business conditions 

The percentage of respondents reporting increased domestic sales stayed at 36%, the same level as Q4. Likewise for the second quarter in a row, 22% reported a decrease and 42% said sales had remained constant.

But there were significant sectoral differences. 44% of professional service businesses said they had seen a boost in sales, whereas only 27% of logistic companies and 29% of retailers saw an increase.

Business confidence remains unchanged

56% of businesses expect to see their turnover increase over the next 12 months – the same as Q4 2023. Only 14% of respondents are expecting to see their financial situation worsen in the year ahead, 29% expect things to remain the same.

Profitability confidence has remained static, with 48% of companies saying they expect profits to increase in the next year. That compares to 47% in Q4. 21% of respondents believe their profits will fall.

Most businesses still not increasing investment

Economic headwinds continue to impact heavily on business investment. The majority of businesses say they haven’t increased the amount of new plant, machinery and equipment they’ve bought or rented. Only 24% reported an increase in investment (the same as Q4), while 60% said levels had remained the same, 16% reported a decrease.

There are large sectoral disparities in investment levels. 28% of hospitality sector businesses say they have decreased investment, while 30% of manufacturing businesses have increased investment.

Many businesses expect their prices to rise

Although inflation has slowed significantly in recent months, almost half of businesses are expecting the price of their goods or services to rise. 46% of respondents are predicting an increase (compared with 47% in Q4), 51% think prices will stay the same, and just 3% are anticipating a decrease.

Labour costs are cited as the main cost pressure across all businesses. For the second quarter running, 68% of responding businesses say they are under pressure to raise prices because of staffing costs. Some sectors are feeling this pressure more than others, with 77% of hospitality businesses and 76% of manufacturers citing it as a key driver.

Interest rates continue to decline as a concern

While inflation remains businesses’ biggest concern, business worries about interest rates continue to gradually fall. 35% of businesses say they are concerned about the cost of borrowing, compared with 39% in Q4. These figures remain high compared with the pre-Covid trend.

Suzanne Caldwell, Managing Director of Cumbria Chamber of Commerce said:

“The results of the Quarterly Economic Survey for Q1 2024 show that challenges including inflation, skills shortages, trade barriers and a lack of clear direction from government on investment, are negatively impacting businesses across the UK and here in Cumbria.

The lack of investment among most SMEs is of great concern. Government moves on rate relief, planning reform and full expensing are welcome – but they haven’t yet shifted the dial. 

While the recent rise in the national living wage (NLW) will be welcomed by millions of employees, it comes at a time when businesses are already struggling with rising wage bills. Given the scale of the increase, incomes have been raised for many people who weren’t close to the previous NLW. Through the impact on differentials, this likely to affect many more salaries, further increasing the impact on employers.

As we move towards the next general election, politicians must remain focussed on supporting businesses to grow. All parties should be looking closely at these results to gain an understanding of the reality for SMEs here on Cumbria and across the country.”

What Cumbrian businesses say:

“My turnover is down 75% compared to the same time last year… not a good omen for the coming months.” – Hospitality business

“Turnover and profitability to reduce in 2024/25 due to lower number of property sales expected. This is planned and reflects the availability of planning permission for new social homes.” – Letting agent

“Profit nullified by salary demands due to rising cost of living and inflation.” – Retail business

“Our expenses are going up but profits are not. We invest in our team with courses and treats to retain and attract staff. This will not be possible to continue to the same extent if profits continue to decrease as they currently are doing.”

“We’re finding it incredibly difficult to invest and move the company forward, due to several issues, money is tight, margins are tight, minimum wage causes heavy extra costs across the board, Business Rate relief is to end next year, we SMEs need as much help as we can get and I don’t see that help coming, which would spell disaster for our company as well as all the other small companies out there.” – Hospitality business

The UK is renowned for being the best place to start and grow a business, but a slow planning system, due to lack of resource and specialist skills, is holding firms, and the country, back and impacting economic growth. To tackle the problem, business must be part of the solution.

This is why the British Chambers of Commerce (BCC), with founding partner Aviva, is establishing a new five-year industry-led programme to increase skills and capacity in Local Planning Authorities (LPAs).

The programme will pay for at least 100 undergraduate and masters’ level qualifications for people entering the planning industry, and for people already working in LPAs who need to develop skills for more senior planning roles.

It will pay for the learner’s training and will aim to facilitate work experience and jobs within LPAs. In return, at the end of their course of study, the learner must commit to work in a council planning role for at least two years.

The BCC is asking businesses from all sectors to contribute to the programme’s fund with the aim of raising at least £3 million. Aviva is contributing £500,000 as the first UK firm to support the scheme.

Announced in the Spring Budget, the government confirmed that they will provide up to £3m in restricted matched funding to Local Planning Authorities to ensure that newly trained people are employed for at least two years post qualification.

Find out more on the BCC’s website here: https://www.britishchambers.org.uk/policy-campaigns/people-and-work/our-solutions/investing-in-talent-building-communities/

The British Chambers of Commerce has launched its Global Britain Challenge report to boost exports and channel overseas investment into the UK.

Among the 28 recommendations are:

•  The creation of a ‘Team UK’ to champion an updated ‘Brand Britain’ and show the world the best of what we can offer.
• A change in mindset, so the UK takes a more vigorous approach to fighting for its future success.
• Finally stepping out of Brexit’s long shadow, so politicians take bold decisions to make it work better and grab the opportunities it offers.
• An injection of more investment into the UK by targeting the big, and growing economies, with the money and understanding to make the most of what we can do.
• A greater emphasis on services exports in the UK’s trade deals.

The ‘Global Britain’ report will be published at an event hosted by Heathrow Airport, on Wednesday 27 March, at the Compass Centre, in Nelson Road, Hounslow.

It is the fourth of five policy documents from the BCC’s new Business Council, as part of the ‘Future of Economy’ project. The report draws on expertise from businesses of all sizes, academia, Chambers and think-tanks.

Its proposals have two aims; to raise the flow of foreign direct investment (FDI) into the United Kingdom and to increase the amount of goods and services we export.

It recognises that the UK is starting from a position of great strength – it is currently the sixth largest economy in the world, the fifth largest exporter, and has the third largest stock of inward investment assets.

The country has an embarrassment of riches – its universities, legal system, culture, creativity and can-do spirit are the envy of the world.

But none of this can be taken for granted. The UK is the only G7 country yet to regain its pre-pandemic level of trade intensity.

To keep its seat at the top table Government, business, higher education, and cultural and societal institutions must work together. Only then can Britain’s place in the world, and the world’s place in Britain be guaranteed.

Martha Lane Fox, President of the British Chambers of Commerce and Chair of the Business Council, said:

“Trade and inward investment are two vital pillars that hold up the UK economy. But despite new free trade agreements and a raft of other deals, the intensity of our exports and imports is lagging behind our main rivals.

“This is about much more than Brexit, it’s about the UK’s attractiveness as an investment location and our reputation as a trading nation in the world. 

“But Brexit casts a long shadow. There is sometimes a reluctance among politicians to either recognise problems or suggest solutions, because of how they may be viewed either side of the Brexit divide. 

“This must stop. Our politicians must be bolder in their decision making. They must set out a strategy on how we mange EU regulation and where, it makes sense, we diverge, so British business can benefit. 

“The UK has so much going for it, and we need to make the most of the huge opportunities that presents.  Rather than deciding strategy based on parochial political concerns, let’s decide on what’s best for the long-term future of the UK.

“That means taking stronger positions and negotiating better deals with the EU and the rest of the world, to champion our world leading services sector. 

“We must also do more to improve the flows of investment into the UK, by going after the big fish – the nations with the biggest and deepest pockets. 

“And it is crucial that we sell the UK’s unique offering and its many advantages to the world as loudly as can.”

Cumbria Chamber welcomed 150 local businesspeople to the Castle Green Hotel in Kendal on Friday night for a black-tie event celebrating local business across Westmorland and Furness.

After a champagne reception, Leader of Westmorland and Furness Council Cllr Jonathan Brook gave a presentation on the combined authority’s first year in operation, highlighting investments to improve infrastructure and boost economic growth in the area.

Chamber Managing Director, Suzanne Caldwell, then highlighted Westmorland and Furness as a tremendous place to live and work, and the Chamber’s work supporting businesses in the area. She then spoke about the value of partnership working, shining a light on some great examples of that.

The after dinner speech was given by Tim Rumney, CEO of Best Western Hotels. Tim’s speech covered his career as a hotelier managing and transforming hotels around the county, including 20 years at Castle Green Hotel where he rose to shareholder and managing director.

Tim’s ideas on business and achievements were interspersed with amusing anecdotes which left the audience in stiches, underlining one of the key points of his speech: that a career in the hotel industry can be at once professionally fulfilling and a lot of fun!

The guests then continued networking late into the evening, after checking their raffle tickets at the tombola which raised £1,140 for Carer Support South Lakes!

Suzanne Caldwell said:

“It was great to share an evening with so many people from across Westmorland and Furness. The dinner was a fantastic opportunity to celebrate local businesses and to meet with business friends old and new, showing, if proof were needed, that Chambers really are Where Business Belongs. ”

We’d like to say a huge thank you to all of our members, patrons and other businesses who supported the event including Kendal Nutricare, Harrison & Pitt Architects, Carer Support South Lakes, GLL (Greenwich Leisure), Thomson Hayton Winkley Solicitors, BNI South Lakes, Westmorland and Furness Council, Carlisle Matters, Harrison Drury Solicitors, Unique Ladies and Kimberly-Clark.

The Directors Forum, sponsored by Muckle LLP, is Cumbria Chamber of Commerce’s networking group for business leaders seeking new challenges, experiences and opportunities.

Since its launch in 2021, Directors Forum has brought local businesspeople together for a range business events including talks from leading entrepreneurs and industry experts, site tours, social functions and roundtable discussions.

During 2024, Directors Forum members will be treated to a calendar of networking events covering key business topics including sustainability, robotics, the economy, and branding and customers service. Full details of all upcoming events can be found on Cumbria Chamber’s website here: https://www.cumbriachamber.co.uk/member-services/directors-forum

The Directors Forum met for the first time this year on Wednesday 27th March at the Halston in Carlisle for an event on the theme of AI & Automation and how businesses can use new technology to boost productivity.

Guest speakers at the event included Darren Jenkinson and Liz Hardwick from DigiEnable and Tom Justice, Associate Solicitor at Muckle LLP.

Tom delivered the first half of the talk discussing legal considerations to be aware of when using AI, around IP, insurance and cyber security risks, as well as UK and EU regulation surrounding AI and landmark cases.

Tom then handed over to Darren and Liz who led a session on using AI & automation to enhance productivity and reduce operational costs. In groups, members engaged in lively discussions around workflows in their own businesses and how these could be improved by introducing AI. The session also covered various AI tools for gathering reviews and communicating with customers and had guests interacting with an AI chatbot.

Discussions and networking then continued over a delicious lunch served by the Halston.

Our next Directors Forum event will be at Another Place, the Lake on 1st May, where we’ll be joined by General Manager David Vaughan and other members of the team for dinner and a talk focusing on the hotel’s brand strategy and approach to customer service.

For more information on Directors Forum contact Joe Sanders via joes@cumbriachamber.co.uk