Suffolk Chamber of Commerce’s Quarterly Economic Survey (QES)

Suffolk Chamber of Commerce’s Quarterly Economic Survey (QES) for the first three months of 2025 shows clear evidence that local business activity and future prospects are at their lowest point since 2020/21.

The vast majority of measures covered by the QES were down quarter-on-quarter and most are also now in negative territory, with more companies reporting declines than improvements.

Following the Budget in the autumn, concerns over corporate taxation continue to dominate business owners and management teams’ worry list, with once again nearly 80% of Suffolk respondents expressing worries about the level of business taxes.

After a comparative quieter few quarters, fears over rising prices are on the rise again – with 53% of companies citing inflation as a concern, up by 12 percentage points compared with the previous quarter.

Domestic market sales is the sole balance to be in positive territory for Suffolk manufacturers (up by a modest two percentage points since the last quarter of 2024  to +2%). Other key indicators have taken a tumble including domestic orders (down six percentage points to -15%), overseas sales (down 19 percentage points to -28%), domestic orders (down seven percentage points to -29%) and future recruitment plans (down 28 percentage points to -13%).

Of particular concern is the decline in other core business indicators for manufacturers which have now fallen to levels not seen since the COVID pandemic:

• Worst figures since Q2 2020:
• cashflow (down 20 percentage points to -35%)
• capital investment (down 23 percentage points to -29%)
• investment in training (down 10 percentage points to -16%)
• confidence in turnover improving (down 11 percentage points to -5%)

Confidence in improving profitability has also fallen to -31% - the worst figures since the last quarter of 2022.

If anything, the declines are even greater for the county’s service companies with falls reported in domestic sales (down 26 percentage points to -12%), domestic orders (down 25 percentage points to -25%), overseas sales (down 16 percentage points to -16%) and overseas orders (down 17 percentage points to -22%).

The figures for domestic sales and domestic orders are at their lowest since Q2 2020 and Q3 2020 respectively.

Service firms have experienced steep declines in cashflow (down 10 percentage points to -16%, a repeat of Q3 2024 which was the worst score since Q2 2020), capital investment (down 5 percentage points to -30%, the worst since Q4 2020), investment in training (down 29 percentage points to -37%. The worst since Q2 2020) and confidence in turnover improving (down 24 percentage points to -4%, the worst since Q3 2020).

Capacity utilisation also took a hit in Q1 2025. Just a fifth of Suffolk manufacturers and a third of service sector businesses are currently operating at full capacity.

As well as uncertainty over the wider global trading situation including the imposition of US tariffs, the vast majority of Suffolk businesses identified the increases to their tax liabilities introduced by the Government, including the removal of some business rates reliefs, lowering the threshold for Employer National Insurance Contributions and above inflation increases to the National Living Wage, as a key factor.

Comments included:

• “It’s really tough out there and the agenda for growth seems very challenging. Another minimum wage increase is unwelcome when coupled with Employer NI increases. It’s only going to get more challenging”. Manufacturer, west Suffolk

• “The worst business conditions in our 25-year history” Creative services company, east Suffolk

• “The tax rise is a concern and has stopped us recruiting and investing in our people”. Education services company, central Suffolk

• “Due to the increase in hourly wages and NI payments, we are already reducing staff and hours to help with costs”. Transport company, Ipswich

The tightening in business activity and sentiment continues to impact the jobs market with manufacturers reporting a 22 percentage point fall and service companies a seven percentage point one in those respondents who have tried to recruit over the last three months.