Resilient Thames Valley business more confident than national picture

Resilient businesses in the Thames Valley continue to buck the national trend of business sentiment, according to the regional results of the British Chambers of Commerce quarterly economic survey for Q4 of 2022.

But the picture is still far from rosy as business owners grapple with inflationary pressures, skills shortages, energy costs, political uncertainty, strikes, tax rises, and trade barriers.

Publishing the results of the survey in a webinar the Chamber said the QES showed "a clear decline in general business conditions in the second half of 2022."

Presenting the national picture, David Bharier, head of research at the British Chambers of Commerce, said: "The percentage of firms showing increased sales has declined significantly.

"Over 82 per cent of businesses – highest on record – are having trouble recruiting the right staff, and as a result are having to operate below capacity.

"Inflation remains the biggest concern by far. Eighty per cent of firms say this is a concern. Drivers are on energy and staffing costs side. Manufacturers say raw material costs are rising by 400 to 500 per cent. One small services firm said its electricity costs were rising from £34,000 a year to £250,000 a year from March.

"Longer-term confidence in turnover and profitability has fallen to Covid-crisis levels, with more firms expecting a decrease in profitability than an increase – the most worrying, but predictable, statistic."

Drilling into the local figures, Clare Hawthorn, director of business services and outsourcing at the Reading office of tax and advisory firm BDO said the outlook in the Thames Valley more positive than the national figure.

More businesses were seeing a decrease in domestic sales in the quarter, up to 22 per cent from 14 per cent in Q3 and 10 per cent in Q2, said Clare. The national figure was 25 per cent for the quarter.

Forty-three per cent were expecting staffing to increase into 2023. The percentage of businesses attempting to recruit was down to 63 from 71 per cent – a positive because people have been able to recruit, said Clare.

And there was a slight decline in businesses seeing an increase in their cashflow to 34 per cent from 38 per cent – but still 10 per cent higher than the national figure of 24 per cent. Investment plans have remained consistent.

And when it comes to business confidence, 63 per cent of businesses in the region said turnover will improve, up from 58 per cent in Q3 and far more positive than the national figure of 44 per cent, while 44 per cent of Thames Valley businesses said they'll see an increase in profitability – compared to 34 per cent nationally.

Meanwhile, 73 per cent of Thames Valley businesses said inflation remained their top concern – down from 90 per cent in Q3 and lower than the national figure of 80 per cent.

The Quarterly Business Survey (QES) is established as Britain’s biggest and longest-running private business survey and has provided data since 1989. The survey, a leading indicator, often picks up changes in the economy long before other surveys and official statistics and consistently mirrors trends in official data. It remains closely watched by both the UK Government and the Bank of England.

The full report can be found at https://www.thamesvalleychamber.co.uk/wp-content/uploads/2023/01/QES-Q4-Report-2022-Final.pdf while the webinar produced by Berkshire Channel can be viewed at https://www.youtube.com/watch?v=WvtJCSRks6w

Pictured clockwise from bottom left: Feisal Meeajaun of Berkshire Channel, Tim Major of Thames Valley Chamber of Commerce, Clare Hawthorn of BDO, and Carole Le Page of BDO