Government Must Do More To Strengthen Confidence As Business Activity Cools in Q3

On the publication of the South Yorkshire People Survey, powered by the Quarterly Economic Survey for Q3 2022, the CEOs of Barnsley & Rotherham, Doncaster and Sheffield Chambers of Commerce said in a joint statement:
 
“This has been a challenging quarter for the region’s economy and our survey reflects that. The unwelcome news that the owners of Doncaster Sheffield Airport (DSA) plan to close the facility was unsettling for businesses across South Yorkshire and devastating for those who work there. We welcomed the supportive statements from the Prime Minister and MPs on finding a positive way forward for DSA – something that would boost business confidence in our region. But we need to see action and clarity from the government, as our open letter published yesterday makes clear.
 
“The developments at DSA took place against a broader backdrop of concern about business conditions in the UK and globally. Our survey records how the rising cost of energy and wages are feeding through to the wider economy. Over Q3, trading conditions weakened, cash-flow positions deteriorated and while recruitment difficulties continued, the balance of firms expecting to grow their workforce fell to its lowest in 18 months.  The turbulence on the financial markets caused by the government’s ‘Mini Budget’ is not the best start to this quarter.
 
“The most important thing now is that policymakers do everything possible to support business confidence. Businesses need to know that the economy will return to a position soon where costs are not spiralling upwards. Our survey ended before the government’s energy support package went live. It will be a vital lifeline and we welcome it. The outlook for energy prices is highly uncertain but if the circumstances demand it, the government must be prepared to extend and refine the support, especially for the many energy-intensive employers based in South Yorkshire and beyond. Along with Chambers across the UK we are calling on the government to empower Ofgem to strengthen regulation of the energy market for businesses.”
 
Highlights from the survey:
 
On the economic outlook

• The balance of firms reporting an increase in forward orders turned negative (-4%) for the first time in two years
• The percentage of businesses operating below full capacity increased to 56% from 45% on the quarter
• 65% of firms reported that inflation was more of a concern than three months ago – up from 28% the same time last year
• 15% of businesses reported increasing concern about the exchange rate (this was before the market turbulence of the last week)

• A net balance of +20% of firms succeeded in growing their workforces – the lowest for over a year
• Of firms that tried to recruit, most (89%) experienced difficulties, similar to the previous quarter
• The most common impact of recruitment challenges on businesses was reduced growth (57% reported this as an impact)