Doing business in Suffolk still harder than it needs to be

Results from Suffolk Chamber of Commerce’s Quarterly Economic Survey (QES) for the period January to March 2026 suggest that trading conditions remained very tough for most businesses – even before the consequences of the conflict in the Middle East  and further Government tax hikes had begun to filter through.

Quarter-on-quarter improvements in some manufacturers’ trading experiences were offset by similar declines in indices for service firms. Overall, most of the measures recorded by the QES remained in negative territory. A negative balance indicates that a greater proportion of businesses reported worsening conditions than those reporting an improvement.

More manufacturers reported an increase in domestic sales during that time (28%) than those recording a decline (24%) – giving a score of + four percentage points. Service companies reported a positive variance of five percentage points (19% versus 14%) in reported overseas sales.

A plurality of manufacturers recorded an expanding workforce (24%) than those suggesting at a decline (16%), with a small majority of them (15% to 12%) expecting an increase in the next three months. Likewise, a positive balance of seven percentage points (16% versus 9%) of service companies expected to take on more staff in the immediate future.

The most striking absence in this data are the percentage of companies reporting or expecting to report no change at all: an indication that business owners and management team were exercising great caution even before the additional instability unleashed by the Iranian war and the hikes in Business Asset Disposal Relief to 18%, mandatory Making Tax Digital (MTD) for those organisations with over £50k turnover, and reduced inheritance tax relief for business assets. 

Against all the other criteria recorded in the QES, there is continued negativity.

Cashflow continues to be under pressure, with manufacturers coming in at minus 30 percentage points (11% reporting an improvement versus 41% recording a deterioration) and service firms at minus 19 percentage points (17% versus 36%).

In addition, far more businesses in Suffolk are scaling back on investment in plant and machinery (33% of manufacturers and 36% of service companies) than increasing (19% and 14% respectively).

The figures for investment in training tell a similar story of decline. 15% of manufacturers reported an increase, compared with 26% cutting back (a negative balance of 11 percentage points). The figures for service firms was 15% and 31% respectively (a negative balance of 16 percentage points).

Unsurprisingly, expectations for profitability improving over the subsequent quarter are all in negative territory, with 33% of manufacturers expecting a boost and 37% a contraction and 24% of service companies projecting an increase compared with a worryingly high 53% expecting the opposite.

Inflation remains an ongoing concern as the vast majority of companies are reconciled to having to having increase their prices: 65% of manufacturers and 43% of service firms. No fewer than 84% of these respondents cited labour cost increases as being a contributory factor.

The survey also captured personal accounts of the impact of these longstanding challenges on Suffolk businesses:

An Ipswich-based IT and marketing company: “We have paused all recruitment since the 2024 budget, when we could see the cost of employing people is just becoming impossible. So we are focussed on trying to do more with a smaller team, but this will of course not be sustainable for very long.”

A commercial estate agent with branches across Suffolk: “We are being taxed out of existence, no incentive to grow the business or to employ new people.”

A components manufacturer with a regional presence: “Frankly, I'm beginning to wonder if being an employer is worth it. As the tax burden goes up so does the stress level. I cannot afford to invest in the latest technology and so I start to lose my competitive edge. Then there are all the new HR rules which frankly mean that I am becoming increasingly unlikely to recruit. I feel that if I put one foot wrong, I will end up in a Tribunal.”

A manufacturer in West Suffolk: “The Government continues to show a lack of understanding of the drivers for private small businesses, so increased tax burdens are limiting investments.”

Paul Simon, Suffolk Chamber’s head of public affairs, said: “Doing business in Suffolk is still harder than it needs to be and, as these personal recollections show, this is having a wholly negative impact on companies and is taking its toll on business owners and managers.”

Doug Field, chair of Suffolk Chamber’s Economy Group, added: “There’s real resilience among Suffolk’s businesses, but that doesn’t mean the situation isn’t serious. Too many firms are treading water rather than moving forward. Government needs to give businesses the stable foundations to invest and grow. There’s no shortage of ambition in Suffolk, just too many barriers standing in the way.”