Nervous times for businesses

Fears of tax rises and economic turbulence caused by the General Election and a potential change in Government policies have triggered a ‘rise in nervousness’ among the Shropshire business community.

That is one of the headline findings in the latest quarterly economic survey carried out by Shropshire Chamber of Commerce.

The survey, which covers the second quarter of this year, quizzed business owners on a wide range of topics including sales forecasts, international trade, recruitment, training, cashflow, and confidence levels.

And it revealed that the unexpected July General Election has fuelled concerns which many employers were already experiencing.

“Every election causes a degree of uncertainty, but this one - coming on the heels of Covid, Brexit and economic sluggishness – is causing more worries than normal,” said Shropshire Chamber chief executive Ruth Ross.

The survey was open to any business of any size in Shropshire or Telford & Wrekin. Companies did not need to be a member of Shropshire Chamber to take part.

The number of businesses reporting a rise in profitability fell by 10% on the previous quarter, while those reporting a rise in turnover was down by 7%.

Around 40% of companies reported a rise in sales in the second quarter – slightly ahead of the previous three months. However, just a quarter of the companies which completed the survey said they were operating at full capacity.

Only one in four exporters said sales were rising – although this again was slightly better than the previous quarter.

Recruitment continues to be a major challenge for many businesses. One retail business said: “We are offering an apprenticeship role, but recruits are incredibly unreliable – the majority didn’t even turn up for their interview.”

Another company in the professional services sector said: “We have difficulty in finding specialist skills, especially in commercial property.”

Nearly three quarters of businesses said they were having to offer higher wages in an attempt to attract new staff, and around one in three said bad debts were increasing.

Times are also still tough for hospitality businesses, the survey showed. Cashflow is becoming increasingly difficult for a significant majority.

One employer said: “Wages and costs of everything has eaten away at our margins for a while, but this year has taken a sharp upward curve with wage bills rocketing.”

Companies were asked to highlight the greatest ‘fear factors’ for their business, and there was a 5% rise in the number who cited taxation – particularly among smaller businesses.

The number of companies viewing inflation as a key fear factor fell by 13% on the previous quarter.

The survey also showed that tightening cashflow is having an impact on investment in plant and machinery, which was down by 15%.

More optimistically, there was a 7% rise in companies reporting an investment in staff training. The Chamber said this was closely linked to the challenges around recruitment.

Ruth said: “Overall, it’s fair to say the results paint a mixed picture. There is clearly a great degree of concern over how the General Election result will impact the business community.

“Taxation featured heavily this time, with manufacturers in particular describing corporation tax levels as a major issue for building reserves for growth and investment.

“The survey also showed a 50-50 split between those saying they expect to increase the prices of their services or goods, and those who expect to keep prices as they are.”

The results of the Shropshire Chamber quarterly economic survey are fed into the national survey by the British Chambers of Commerce, which is used by the Bank of England and other relevant bodies and economists.

Pictured: Ruth Ross