Economic survey shows a general decline in confidence and performance

West & North Yorkshire Chamber of Commerce research shows that business activity among the region’s businesses declined at the end of 2023, with employment, sales and investment among the region’s firms all having fallen.

Data from the Chamber’s Quarterly Economic Survey showed that the positive set of results seen during the third quarter of the year, there had been a general decline in confidence and performance.

Pay settlements joined inflation and interest rates as the key external pressures facing businesses in the region.

Sales, both domestically and internationally, declined – in some sectors by a dramatic margin with 38 per cent of firms in the manufacturing sector reporting decreasing activity.

Similarly overseas sales for service sector firms declined at their sharpest rate since the onslaught of the pandemic.

Hiring intent also declined but few firms expect to cut staff, with most businesses expecting to keep staff levels static, with 78 per cent of service sector firms and 67 per cent of manufacturers anticipating no change to their headcount in the coming months.

Despite the bleak picture reported during the fieldwork during the latest QES, Yorkshire business remains optimistic on profits with neither sector anticipating a loss during the start of 2024.

Service sector firms confident on delivering profits in the short-term.

Despite inflation falling by higher-than-expected levels during Q4 it, along with interest rates, are still posing huge problems for businesses and remain a constraint on growth.

The context in which the fieldwork for the final Quarterly Economic Survey of 2023 was carried out will have influenced the findings.

It took place after the horrific events of October 7 precipitated the armed conflict in Israel and before the announcement that inflation had fallen by more than expected.

Just over a third of respondents said the war in the Middle East would harm their businesses while a comparable amount said the Ukraine conflict was a negative factor.

And despite the drop to below five per cent in November, inflation is still cited by business leaders as among their chief external pressures.

The fieldwork was also carried out following the hugely disappointing news that the Government has cancelled HS2 to the north of England, something 33 per cent of business leaders in Yorkshire said was bad news for their enterprise.

Martin Hathaway, managing director of the Mid Yorkshire Chamber of Commerce, said: “While quarter four presented some challenges with inflation still squeezing many organisations across our region, it is extremely encouraging to see that investment for staff training in service sector firms increased by 32 per cent.

“Upskilling and training staff is crucial to see future growth, setting us up for a strong 2024 to get back on track and back to delivering the exceptional business successes that Yorkshire is known for.

“This year, we as a Chamber have also had a huge focus on skills, working with our partners at the West & North Yorkshire Chamber of Commerce, researching, planning and beginning to implement the Local Skills Improvement Plans (LSIPs) for West Yorkshire. This is a key project that we will continue to work closely with our education providers on throughout the new year to ensure we get things right for generations to come.”

Mark Casci, head of policy at West & North Yorkshire Chamber, said: “Pay settlements are increasingly being cited by business leaders as a cause for concern as business leaders seek to appease and retain a workforce that is being squeezed by soaring costs at every turn.

“While the decline in sales and investment activity is naturally a serious cause for concern, the outlook on profitability gives me grounds to remain sanguine.

“I speak to hundreds of businesses every month and, while there are of course significant challenges to trading, I have yet to detect a hint of nihilism.

“After such a turbulent few years, businesses have become accustomed to choppy waters and I have yet to hear an economist predicting a return to stability any time soon.”

Read the Quarterly Economic Report Q4 2023 online.

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