Latest Updates From Surrey Chambers CEO – 12th December 2022
19th December 2022
This week has been full of statistical data, bringing a rather sombre view of the economy. I will report on the data but with a caveat that local businesses have been doing everything they can to weather the inflation, recruitment, and energy crises. Meanwhile Surrey Chambers of Commerce continues to devise and deliver support to keep Surrey businesses successful. We hope our businesses are able to take a well-earned break over Christmas ready to face the challenges of 2023.
The state of the economy
The monthly growth in the economy for October of 0.5% is overshadowed by the underlying three-month trend revealed by the data, which shows a contraction in the economy of 0.3%. As September’s figure was depressed by the Bank Holiday for the Queen’s funeral, October’s data was always likely to show a comparative improvement. But our British Chamber latest quarterly economic forecast expects the UK economy to be in recession for five consecutive quarters. Nationally, business confidence has been falling dramatically as firms face into a wall of higher prices and energy bills, increased taxation, and rising borrowing costs. We are asking government to take concrete action to resolve the immediate disruptions facing the UK economy, such as soaring energy costs and the burdens in our trading relationship with Europe. We are also asking to see a long-term plan on infrastructure, skills, trade, and green innovation.
According to the latest labour market figures, the job market is still very tight. Job vacancies remain at record highs, adding to the recessionary pressure businesses are facing. We have urged the Government to immediately reform the Shortage Occupations List. This will help businesses fill urgent job vacancies from abroad when they cannot recruit skilled people locally. While some over 50s are returning to work, firms need to invest much more in training and upskilling, and politicians need to be realistic about the skills we need from outside the UK. Brexit has given us control of our borders and Government must use the appropriate levers to help struggling businesses get the people they need.
The latest inflation rate announced this week, of 10.7% may indicate we have passed the peak, but prices are now at a much higher level which will be felt for months to come. Our research shows that inflation remains by far and away the number one concern for businesses. Even if the rate of increase starts to slow, the damage to business confidence has been significant. With their margins left razor-thin, very few businesses are planning to increase investment as they deal with a wall of higher energy bills, input costs, interest rates and taxation.
There was a cloudy trade picture in October as goods exports fell again – well short of forecast 2022 growth. The Office of National Statistics (ONS) Trade data shows a 4.7% fall in the value of goods exports, although services held up better. Overall, though, export performance continued to undershoot the Office for Budget Responsibility (OBR’s) 8% forecast growth for this year. With data for 10 of the 12 months of 2022 now in, it’s clear that the scale of growth in exports predicted last October is not happening. With tougher economic conditions most likely ahead, next year will need a step change in efforts by business and government to develop the Export Strategy to sustain trade volumes.