Business inflation and tax worries at a record high

The combined negative impact of price increases and taxation hikes are the overwhelming worries of the Suffolk business community, according to the latest Suffolk Chamber of Commerce Quarterly Economic Survey (QES).

94% of respondents reported that inflation was their current biggest business worry -  the highest figures recorded for this indicator since data on it was first collected in 2009. Furthermore, 89% of manufacturers and 67% of service companies are also expecting prices to continue rising throughout the middle part of 2022.

The second greatest area of concern is that of corporate taxation with 36% of respondents to the survey pinpointing this issue.

Paul Simon, head of public affairs & strategic communications at Suffolk Chamber commented: “It is no coincidence that the current pressure being felt by businesses due to rising raw material, components and energy prices on the one hand and increases in taxation, including the forthcoming hike in employer NI contributions is impacting on activity levels.

“In particular, Suffolk Chamber is very worried that the cashflow situation – a vital indicator of business health - for all companies has continued to worsen over the last three months.”

The number of manufacturing firms reporting positive cashflow fell further into negative territory and down stands at -20% (down nine percentage points compared with Q4 2021). The figure for service companies stands at -8% (down three percentage points).

Most businesses that were looking to recruit in the last quarter of 2021 also reported difficulties in filling vacancies, with 100% of manufacturers and 91% (up five percentage points) of service firms struggling to find the right quality of staff.

Aside from small improvements in investment levels, turnover and profitability by service companies and for manufacturers in terms of domestic sales and orders, most of the other criteria measured by the QES saw quarter-on-quarter falls, although the majority of those remain – just – in positive territory (with more firms reporting positively rather than negatively).

For manufacturers, the biggest falls were in investment in plant and  machinery (down 24 percentage points to +11%) and turnover  (down 17 percentage points to +50%).

For service companies, the greatest declines were in export sales and export orders (both down 44 percentage points to -40%).

Suffolk Chamber is continuing to call for the Government to lighten both the fiscal burdens on businesses and through short-term support for SMEs to offset the rising cost of energy and fuel.

Suffolk Chamber is grateful to Suffolk Knowledge, part of Suffolk County Council, for providing the analysis of this QES.