The warning comes from the British Chambers of Commerce
Business confidence has stagnated and the future remains bleak for small firms struggling against “monumental” inflationary pressures and energy costs, an influential business group has warned.
One small services firm in Somerset reported that its electricity costs will skyrocket from £34,000 per year to around £250,000 from March, the British Chambers of Commerce (BCC) found.
The BCC, which surveyed more than 5,600 businesses in November, 92% of which were small to medium enterprises (SMEs), urged the Government to provide clarity over its new energy support package after it “failed” to do so before Christmas.
The survey found that more than a third of businesses expect their profits to decrease over the coming year, higher than the number who expect profits to rise.
Increased business costs, driven up by inflation, has remained a critical concern for businesses up and down the country, the BCC said.
Two fifths of firms said they expect their prices to rise over the coming months, remaining near record highs but easing up slightly from the 62% who said so in the previous quarter.
And inflation remains a growing worry for a massive 80% of businesses, followed by interest rates at 43% of respondents and taxation at 38%.
David Bharier, head of research at the BCC, said: “The situation remains critical for the majority of SMEs who find themselves cut adrift by monumental inflationary pressures, often driving triple-digit percentage cost increases, particularly on energy.
“Business confidence remains worryingly low, with only a third of firms reporting improvements to sales, and less than a quarter reporting increased investment.
“The widespread economic damage caused by Covid shutdowns has been compounded by subsequent inflation, global trade crises, and new trade barriers with the EU.
“For many SMEs, the cost of doing business is now simply too high.”
Another small retailer surveyed in Norfolk said it was still suffering from the impact of Brexit which cut off its European export trade almost entirely, and cutting its turnover by half.
Meanwhile, a small professional services firm in Sussex said it was having to turn away work because it is desperately short of semi- and unskilled workers.
The BCC, which represents thousands of businesses within all sectors, went on to urge the Government to create better conditions for UK businesses to trade and manage cost rises outside their control.
Shevaun Haviland, the BCC’s director general, said: “The outlook from businesses remains bleak. Now, more than ever, we need to create the right conditions for firms to invest and grow.
“Providing businesses with clarity regarding the new energy support package must be top of the Government’s agenda for the new year, after they failed to do so before Christmas.
“We urge the Government to promote business growth by investing in public infrastructure and incentivising international trade, with a particular emphasis on making the UK the global hub for green innovation.
“Barriers to trade must be removed in order to allow firms to realise their full trading potential.
“The Government’s new year’s resolution should be to put business support for SMEs at the heart of its agenda and get the UK back on the road to recovery.”
Published: 04/01/2023 by Radio NewsHub