Latest Updates From Surrey Chambers CEO – January 2023
3rd January 2023
Welcome to the world of 2023 and I am sure you are all wondering what could possibly surprise us this year! 2022 ended with many negative messages coming from the various statistics and surveys done amongst businesses. I will comment on the data but with a caveat that local businesses have been doing everything they can to weather the inflation, recruitment, and energy crises. We must remind ourselves that we are a vibrant business community, and we continue to bolster up the government’s coffers with our contributions to HMRC. Meanwhile Surrey Chambers of Commerce continues to devise and deliver support to keep Surrey businesses successful.
The state of the economy
The monthly growth in the economy for October of 0.5% was overshadowed by the underlying three-month trend revealed by the data, which showed a contraction in the economy of 0.3%. Our British Chamber latest quarterly economic forecast expects the UK economy to be in recession for five consecutive quarters.
According to the latest labour market figures, confirmed by local intel, the job market is still very tight. Job vacancies remain at record highs, adding to the recessionary pressure businesses are facing. 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.
The latest inflation rate announced, 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. 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.
What are we asking government to focus on?
We have been 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.
In November, the Chancellor promised businesses that they would receive a plan on the future of the energy support package before the end of the year, and disappointingly they have failed to produce it. Without a clear plan before January, many businesses will be left vulnerable to extortionate prices at the end of March, especially SMEs and energy intensive businesses. We will keep the pressure up on getting this plan out as soon as possible in 2023.
How was Brexit for you?
For our exporting businesses it has been very difficult: In spite of the UK-EU Trade and Cooperation Agreement (TCA) more than three quarters (77%) of firms, for which the Brexit deal is applicable, say it is not helping them increase sales or grow their business; More than half (56%) of firms face difficulties adapting to the new rules for trading goods; and almost half (45%) face difficulties adapting to the new rules for trading services, and a similar number (44%) report difficulties obtaining visas for staff. The trade deal has increased costs and it has increased bureaucracy, which means UK businesses are less competitive in the EU and are losing out on trade. This isn’t just about trade volumes. Smaller businesses have really suffered. The range of products we export to the EU has decreased by over 40%. That can’t be good for our competitiveness or the resilience of our economy. Our government MUST take steps to ease these problems before our European exports are eroded any further.