Growth ambitions must not be allowed to falter - Beckie Hart

Here we are, two years on from the onset of a pandemic which saw many firms shuttered for months and footfall drop to zero for some sectors; we’re now in the midst of the worst cost-of-living crisis in a generation, with war in Europe and supply chains stretched to their limits.

Yet throughout all of this, the wheels of British industry have continued to turn, safeguarding services and livelihoods and serving their communities with distinction.

But make no mistake, these are tough times for businesses, just as they are for households. And whether you’re holding the purse strings for a multinational business empire, or trying to make ends meet within your family finances, it’s likely that current cost pressures are biting deep – and impacting both your immediate and future spending intentions.

That’s why this is a perilous time not only for business, but for the longer-term prospects for the Yorkshire economy. Because even those who have defied the odds to keep their heads above water over the past two years are finding things tough right now.

As trading becomes more difficult, so investment intentions falter – and the big ambitions we hold for levelling up, economic growth and a low carbon transition all become markedly harder to achieve.

This is all backed up by new CBI data published over the past seven days. Take manufacturing, for example. While sector output has proven reassuringly resilient so far, growth in new orders is now slowing, and optimism has fallen more sharply than at any time since the opening weeks of the pandemic in 2020.

Costs and domestic prices within the sector are to blame, having grown over the past quarter at the fastest rate since the 1970s. The surging price of raw materials, energy and other inputs explains much of this rise, but transport and labour bills are up too, highlighting how cost-of-living increases are squeezing on multiple fronts.

The upshot is investment intentions have weakened across the board. Money earmarked for new buildings, training, innovation or equipment – spending expected to add impetus to the post-pandemic economic recovery – is now on hold.

The retail sector too is beginning to see the effects of the squeeze on household incomes, with sales now sliding. A sector that can serve as a barometer of household financial health saw its first fall in sales volumes in more than a year in April, according to our latest survey – a clear sign that the region’s consumers are tightening their belts with higher energy prices and National Insurance rates hitting people’s pockets.

This cost-of-living crisis is going nowhere soon – but must not be allowed to stymie the country’s growth ambitions. There are steps that Government can take to help.

For businesses, Ministers must look again at near-term support measures to help firms through this crisis. This week’s extension of the Energy Intensive Industries Compensation Scheme is welcome and can help maintain UK competitiveness, but a further priority should be to provide cashflow support for those struggling with wholesale energy costs via the Recovery Loan Scheme. Waiting for the Autumn Budget risks leaving it too late.

For families, the Government will need to keep a close eye on support for those households most vulnerable to higher energy and food prices. The Chancellor may yet face pressure to further supplement support measures contained within the Spring Statement.

Targeting future growth must be the primary focus for Government, and for business. It is the only sustainable route to long-term prosperity and improved living standards across Yorkshire & the Humber and the rest of the country.