Business conditions in Suffolk: grim for manufacturers, volatile for service companies as tax hikes hit confidence

Suffolk Chamber of Commerce’s Quarterly Economic Survey (QES) for the last three months of 2024 suggests that local business activity and future prospects have taken a sharp downward turn, with concerns about increased business taxes the most common reason given for the growing pessimism.

Following the Budget in the autumn, concerns over corporate taxation have come to dwarf all other factors. More than 80% of Suffolk respondents expressed worries about the level of business taxes -  double the level seen this time last year.

This compares with the next major concern, inflation, which was identified by 40% of respondents, the lowest level since Q2 2021.

Whilst the QES data recorded some welcome quarter-on-quarter improvements among service companies, most notably for domestic and overseas sales and orders, the net balances (companies reporting improvements less those companies reporting declines) remains fragile with most indices still in negative territory.

Conditions are even more challenging for manufacturers with declines recorded in every single measurement that comprises the QES bar one – export sales (up eight percentage points).

Manufacturers reported slowing trade in domestic (down 13 percentage points) and export (down six percentage points) order books as well as in domestic sales (down 22 percentage points).

With trading conditions increasingly fragile, the proportion of businesses committing to investment in plant and machinery (down 21 percentage points for manufacturers and 17 percentage points for service firms) and training (down 39 percentage points for manufacturers and one percentage point for service companies) contracted markedly in the fourth quarter of 2024, with the Suffolk declines outstripping those in the East of England as a whole. 

Businesses are less optimistic about improving profitability, with all balances in negative territory in the quarter. The manufacturing sector experienced an especially worrying fall in confidence in the latest survey results (down 49 percentage points), with the Suffolk balance hitting its lowest point for two years.

The downturn in business activity and sentiment is beginning to have an impact on the county’s jobs market. Whilst well over half of respondents attempted to recruit between October and December, there is much more fragility in overall employment numbers. With growth stagnant according to recent ONS data, and the QES results showing that confidence in profitability has plunged into negative territory, the squeeze on recruitment could continue to intensify.

Paul Simon, head of public affairs at Suffolk Chamber, said: “This survey makes for rather grim reading as local growth and confidence seem to be in danger of leaking away.

“There must be no further tax hikes on businesses during this Parliament. Indeed, we believe that the tax take from business needs to be progressively reduced from this point in the current Parliament onwards.

“The forthcoming Spending Review must also be the year in which Suffolk’s longstanding infrastructure investment asks - that will implore business confidence and sharpen the competitiveness of the whole national economy - are signed off.

“The Suffolk Convention, hosted last year by Suffolk Chamber, identified the key countywide economic priority as investment in the Ely and Haughley rail junctions, which will significantly improve decarbonised rail freight capacities out of our ports and to and from other parts of the country. We are also looking for priority approval for improved strategic road, 5G and water supply infrastructure, the last vital to our county’s important land-based economy.”