UK business confidence is lingering near the lows it touched in the coronavirus pandemic as companies braced for falling profit during a recession in 2023, the British Chambers of Commerce said.
The employers group said its quarterly survey of almost 6,000 companies, many of them small- and medium-sized enterprises, showed that just one-in-three expect profits to increase in the coming year, and 36 percent anticipate a decline.
The findings add to the gloomy outlook for the UK economy, which is suffering some of the highest levels of inflation in four decades and the tightest squeeze on household finances in memory.
The economy also is suffering from a slump in trade following Britain’s exit from the European Union and global pressures on supply chains.
“The widespread economic damage caused by Covid
shutdowns has been compounded by subsequent inflation, global trade crises, and new trade barriers with the EU,” David Bharier, head of research at the BCC, said in a statement Wednesday.
“Business conditions deteriorated significantly in the second half of 2022.”
The BCC said business activity hasn’t recovered since plummeting in the third quarter, with 67 percent of firms reporting either further declines or no change in the final three months of the year.
Activity in the retail and hospitality sectors was particularly weak, with staff shortages and slowing consumer demand hobbling firms. Three-quarters of hospitality businesses said they were operating below capacity.
Business investment has fallen sharply, and the BCC suggested that trend may continue. Just 21 percent of firms saying they’d invested more in the fourth quarter of 2022, while 79 percent said their investment levels had either declined or not changed.
“Our electric costs will rise from £34,000 ($40,885) per year to around £250,000 ($300,630) from March and there is so much uncertainty,” said a small services firm in Somerset.
“We want to invest to make us more efficient and reduce our electrical usage, but there are no grants on offer to help.”
BCC Director General Shevaun Haviland said the government should waste no more time in providing firms with clarity on plans for an energy support package, which they “failed” to do before Christmas.