Yorkshire businesses face 'perfect storm' caused by rising inflation and labour shortages, survey warns

Yorkshire businesses are facing a “perfect storm” caused by rising inflation, shipping disruption and labour shortages, according to an influential survey.

However, the latest economic report from the Chambers of Commerce in West and North Yorkshire also found that underlying domestic demand remained strong over the last quarter and the region’s firms are keen to recruit and invest, despite the economic uncertainty.

The report highlights “significant concerns” over rising inflation from raw materials and energy and recruitment challenges.

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Amanda Beresford, chair of West & North Yorkshire Chamber of Commerce, said: “This quarter we report on the perfect storm which our regional business community is facing.

Amanda Beresford, chair of West & North Yorkshire Chamber of Commerce, said: “This quarter we report on the perfect storm which our regional business community is facing."

“This is almost entirely driven by supply side challenges as raw materials, shipping disruption, rising energy costs, haulage costs and labour shortages are all contributing to increasing the costs of doing business. This is further impacted by global Covid spikes and the tragic war in Ukraine, all of which follows the most challenging two years for business.”

“Short term, inflationary pressures will have a material impact on company cash flows and likely hinder their recovery. Longer term business confidence remains largely unchanged from the last quarter as companies try and see beyond the next six to 12 months.”

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Martin Hathaway, the managing director of Mid-Yorkshire Chamber of Commerce said: “The pressures that are currently facing businesses are strong but I am confident that our economy can weather the storm. Despite the challenges, our firms here in Yorkshire remained confident throughout quarter one, which is a positive sign as net balances remained at pre-Covid levels throughout. The desire to invest and recruit is there; we just need to see greater support and options for those looking to level up their businesses.

“We hope to work more closely with local authorities and Government in the coming months to create a stronger, more inclusive workforce to seal Yorkshire’s future as the place to do business in the UK.”

Sir Roger Marsh OBE DL, chair of the Leeds City Region Enterprise Partnership and NP11, said, “Alongside labour shortages, businesses are facing rising inflationary pressures last seen in the early 1990s. Energy and utility prices are reported as a major problem facing businesses, particularly those in energy-intensive manufacturing. Many commodity prices have recently increased due to the war in Ukraine, particularly those found in Ukraine and Russia, such as wheat and nickel.”

Delays at ports in China due to Covid lockdowns are adding to these economic headwinds, Sir Roger warned.

Fieldwork for the latest quarterly economic report from the Chambers of Commerce in West & North Yorkshire took place as Russian forces invaded Ukraine.

Concerns about the invasion are reflected in respondents’ fears about the exponential rise in raw materials, including metals and fertiliser.

West & North Yorkshire Chamber of Commerce is accredited by the British Chambers of Commerce and has represented businesses based in Bradford, Leeds, York and North Yorkshire since 1852.