UK hospitality and retail firms are consistently more likely to report worsening cash flow, investment, and turnover than businesses in other sectors, British Chambers of Commerce noted last night as it published its latest quarterly economic survey.
The survey shows, while confidence among firms has improved from a very weak base, most firms see no improvement in business conditions. Of more than 5,200 firms surveyed, only 34 per cent experienced an increase in sales over the past three months, while 24% posted a decrease and 41% reported no change.
Around 87% of hospitality firms reported utilities as a factor driving price increases, while 86% of manufacturers flagged raw materials. Three-quarters of respondents reported no increase to investment in plant and equipment.
British Chambers said: “There has been little discernible improvement to investment over the past six years - only a quarter of firms planned to increase investment in Q1 2023, the same level as reported in Q2 2017.”
The research was conducted between February 13 and March 9, before Chancellor Jeremy Hunt’s Spring Budget.
British Chambers director-general Shevaun Haviland declared the Budget “did not go far enough to shift the dial on growth, which remains stubbornly low”
She explained: “The Government failed to tackle some of the major issues holding firms back from their potential, in particular energy costs and the tight labour market which remain top business concerns.
"The Government’s new energy support package represents a drop of 85% in the financial help available to businesses. We reiterate our calls for increased, targeted support for those firms who desperately need it. The energy crisis faced by firms and households are two sides of the same coin. Yet, non-domestic customers do not enjoy the same protection as households.
"To ensure competition in the business energy sector, and solve market failures, government must also ensure Ofgem has the necessary powers to properly regulate the industry.”
She added: “While we welcomed the Government’s decision to add five new construction jobs to the shortage occupation list, the lack of skilled labour is having a corrosive effect on our economy. This shift to a new system cannot come fast enough and other sectors facing huge recruitment pressures, such as hospitality, must be given help.”