Inflation overtakes tax as chief cost pressure facing Yorkshire firms
Inflation has overtaken taxation as the chief cost pressure facing businesses in Yorkshire, according to new data from West & North Yorkshire Chamber of Commerce.
With taxation having consistently been the number one issue facing businesses for the past few Quarterly Economic Surveys (QES), new research has now found that rising prices are impacting the region’s businesses to a far greater extent than seen in the last few years.
Mark Casci, head of policy and representation at the Chamber, said: “This latest QES shows that Yorkshire’s economy is stabilising but not strengthening.
“Across the region, businesses are showing resilience in the face of continued uncertainty.”
The fieldwork was conducted during the blockade of the Strait of Hormuz, which led to a large impact on energy costs and shipping, leading to the inflation spike.
The blockade also led to a significant decline in export performance among the region’s firms.
Encouraging economic signs were seen through the region's service sector firms, which reported an increase in hiring intent for the first time in more than a year.
Domestic sales also continued to improve along with willingness to invest in upskilling current staff.
However, manufacturing firms reported a more challenged situation, with order books and recruitment declining.
The QES data showed cashflow to be an ongoing issue, with cost pressures continuing to increase, creating a challenging environment for all businesses.
Mr Casci added: “Encouragingly, domestic trading conditions have improved, particularly within the service sector, where modest growth signals that underlying demand has held firm.
“This is an important foundation. However, the lack of momentum in order books tells its own story - one where confidence remains tentative and the outlook uncertain.
“Taken together, this quarter’s results point to an economy that is holding its ground rather than accelerating. There are clear signs of resilience, but also clear signs of risk. Sustained growth will require stronger demand, improved export performance and a more stable operating environment for businesses to plan and invest with confidence.
“As ever, these findings underline the importance of creating the conditions in which businesses can thrive - supporting investment, unlocking trade opportunities and addressing the cost pressures that continue to shape the economic landscape.”
David Bharier, deputy director economics and insight, at the British Chambers of Commerce, added: “The continued fall in SME investment sentiment is further evidence of a longer-term pattern that no single shock explains.
“Our data shows a risk-aversion cycle taking hold. Firms have not lost ambition, but years of compounding cost pressures and geopolitical shocks have produced defensive behaviour for the average SME.
“Most firms are now experiencing policy as downside risk rather than opportunity - with the rise in employer NICs a prominent example, still being felt almost two years on. Reducing the cost and complexity of the administrative burden would give many firms the space to grow.
“But more broadly, government policy needs to pass a 'growth delivery test'. Each proposal should start from the question of exactly how it will cause firms to increase investment, exports, hiring, or expansion. Until that test is being applied, our survey is likely to show the same pattern quarter after quarter. The challenge for the new Prime Minister and his team is clear.”