Business confidence in Yorkshire and the Humber has tumbled as companies face a cost of doing business crisis, a new survey survey suggests.
Chartered accountants ICAEW’s Business Confidence Monitor for the third quarter of 2022 for Yorkshire and the Humber found that confidence had fallen for the fourth successive quarter and was now in negative territory. Amid rising costs, companies faced challenges from a lack of customer demand, staffing difficulties and slower domestic sales growth than in other parts of the UK.
With firms facing increasing costs amid soaring energy prices and high inflation, ICAEW said households and companies would need support in the short-term to get through the next few months. Of those businesses in the region surveyed, 40% said they faced a growing challenge from customer demand.
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Just over half of the region’s businesses said they were struggling with staff turnover, while the availability of non-management skills was a growing challenge for two-fifths of businesses. A quarter of businesses cited the availability of management skills as a growing challenge.
Meanwhile, domestic sales growth was slower than elsewhere in the UK, while export growth was behind the national average. Businesses in Yorkshire and the Humber have muted expectations for the next year, the survey showed.
Staff levels grew by 1.5%, a slower rate than anywhere else in the UK, with a similar rise forecast for the next year. To address this, companies plan to increase salaries by 3.2% over the next year, which will be the sharpest rise in the region in 14 years.
Two-fifths of companies said that transport problems were a growing challenge, mirroring labour shortages and changes post-Brexit. A quarter of businesses said that the tax burden was a growing challenge, possibly related to both direct taxes and the impact of changes on customers.
Input price inflation stood at a record 4.7%, reflecting the impact of supply-chain problems and the increase in commodity prices. Businesses expect an even stronger rise in input costs of 5.1% over the next year, and firms have passed on some of these costs to customers, with selling prices up 3.1%.
James Callaghan, ICAEW regional director for Yorkshire and the Humber, said: “The Business Confidence Index in Yorkshire and the Humber has dropped into negative territory, with our businesses facing a crisis over the cost of doing business. Companies in our region tell us that they are struggling with customer demand, staff turnover and a lack of skills, while input price inflation is rising at the fastest rate since this survey began.
“With inflation running at levels not seen for 40 years, ministers must provide targeted support for struggling businesses and households to keep the lights on this winter.”
