- BCC report says many UK businesses are still in a state of ‘paralysis’
- The level of business investment remains low under continued pressure, BCC said
Nearly half of British businesses expect to increase the price of their goods or services in the coming months despite broader easing of inflationary pressures, new findings show.
A survey by the British Chamber of Commerce (BCC) shows that 46 percent of business respondents say they expect the price of their goods and services to continue to rise.
Fifty-one percent of companies surveyed said they think their prices will remain the same, while only 3 percent are preparing to lower their prices.
More price increases: Nearly half of British businesses expect to increase the price of their goods or services in the coming months
“Economic headwinds continue to have a severe impact on business investment,” the findings said.
The survey, conducted between February 12 and March 12, covered 4,800 businesses in the UK, of which 92 percent were small or medium-sized businesses.
Higher labor costs remain an important reason why many companies increase their prices, according to the results of the BCC survey.
The BCC said: ‘Some sectors are feeling this pressure more than others, with 77 per cent of hospitality businesses and 76 per cent of manufacturers citing this as a key driver.’
The survey results also paint a bleak picture when it comes to business investments.
Most companies surveyed said they had not increased the amount of new plant, machinery and equipment they bought or rented.
Twenty-four percent reported an increase in investment, as in the last quarter of last year, while 60 percent said the level had remained the same and 16 percent reported a decrease.
Sluggish: The level of business investment remains sluggish, the BCC said
The BCC said: ‘There are large sectoral differences in investment levels. 28 percent of companies in the hospitality sector say they have reduced investments, while 30 percent of manufacturing companies have increased investments.”
According to the BCC’s findings, there was no overall improvement in business conditions in the first quarter of this year, ‘as measured by investment, sales and cash flow.’
After a slight increase in the last quarter of last year, business confidence has ‘remained static’.
Fifty-six percent of companies surveyed expect their revenue to increase this year, unchanged from the final quarter of last year.
Only 14 percent of respondents expect their financial situation to worsen in the coming year, while 29 percent expect the situation to remain the same.
The BCC added: ‘Confidence in profitability has remained static, with 48 per cent of companies saying they expect profits to rise in the coming year.’
David Bharier, head of research at the BCC, said: ‘The latest QES results provide further evidence that the UK economy is stuck in a state of low to no growth.
‘While business confidence remains strong at the start of the year, most SMEs are still not reporting any tangible improvement in business conditions.
‘The lack of investment in most SMEs is a real concern. Inflation, skills shortages and a near-endless list of new trade barriers with the EU, coupled with a lack of clear direction on infrastructure and technology investment at government level, have paralyzed many businesses.
‘The increased proportion of companies expecting price increases also reflects global conflict and the introduction of further import costs.
‘As we head towards elections, companies will need to see a clear long-term plan for investment and innovation from politicians.’
Shevaun Haviland, director general of the BCC, said: “We urgently need new investment in SMEs. “Government action on rate reduction, planning reform and full spending is welcome, but they have not yet turned the dial.”