BUSINESS CONFIDENCE SHAKEN AS FIRMS BRACE FOR NEW YEAR CHALLENGES

Business confidence in the Liverpool City Region has deteriorated since October, according to the localised results of the British Chambers of Commerce’s latest Quarterly Economic Survey.

Taking place in the weeks after the Chancellor’s Budget, the survey results were in stark contrast to the previous quarter’s results, revealing that turnover and profitability expectations of Liverpool Chamber member businesses had plummeted from a five-year high to levels matching the aftermath of the 2022 ‘mini-budget’.

Just 54% of respondents expect their business turnover to increase in the next 12 months (down from 77%) and only 36% forecast profitability to increase over the same period (down from 64%).

Liverpool Chamber Businesses also reported reductions in domestic sales, orders, cashflow and investment intentions.

Almost 60% expect to increase the price of their products and services in the coming three months, with labour costs accounting for the vast majority of the cost pressures.

A difficult budget for business

Asked to reflect on the impact of the Chancellor’s budget on their business, 64% of Liverpool Chamber business ownermanagers identified business taxation, including national insurance, as a concern, the highest level since 2017.

60% of the respondents identified the employers’ NIC increase and threshold adjustment as the most impactful policy announcement from the Budget upon their business.

Voice of the Chamber

Paul Cherpeau, Chief Executive of Liverpool Chamber, said:

“While the national government seeks to create a long-term plan for sustainable business growth, it’s clear this will offer little respite to the substantial and damaging short-term issues facing businesses today.

“Understandably, confidence among business leaders has been negatively impacted. However, businesses here are absolutely committed to working through the short-term challenges to create strong, purposeful businesses that can compete in national and international markets.

“They also recognise the opportunities for the Liverpool City Region to capitalise upon the creation of further devolved powers and create conditions for economic growth and prosperity. This includes development of a local talent pipeline to meet the needs of an evolving city region economy, delivery of investment zones and innovation growth, a longer-term export delivery plan and an infrastructure and house-building programme to build confidence and supply chain opportunities.

“We therefore urge national and local governments to work with us and our business communities to acknowledge and respond to the real everyday challenges companies face, by creating trading environments that will enable them to grow, thrive and be sustainable.”

“The results of the Quarterly Economic Survey reflect the economic challenges that are prevalent in both the Liverpool City Region and more broadly across the United Kingdom”

Liverpool Chamber is keen to understand the outlook for more local businesses and how it can support them. To get in touch, email policy@liverpoolchamber.org.uk or visit www.liverpoolchamber.org.uk.

What Liverpool Chamber members say:

“It’s becoming harder to sustain revenue adjustments to compensate for the pace of Real Living Wage and the impact on national insurance changes” Hospitality business

“Biggest issue is shortage of skilled labour. Overall rising costs and tighter client budgets resulting in less profitability” Technology company

“Many [in our sector] have revised their projected turnovers downward by 25–30% compared to their original plans, I believe the next 12 months will be very challenging for the sector.”

Construction firm

“There has been an unprecedented number of insolvencies amongst our client base this last 12 months – it is an economic headwind which the recent Budget did nothing to allay” Accountancy firm

“Government have little understanding of international business, their disconnection is evident in the financial policies they imposed on all businesses, whether through direct taxation or through the increases in utilities which the government has huge vested interests in.” Export business

“We should be recruiting and training, but the changes in employment law and taxes has made me take a back step and we will continue as we are.”

Exporting business

“NIC increase coupled with the reduction in the threshold and the increase in minimum wage, which has a knock-on effect for the rest of the staff, will have a massive impact on our profitability. We have also had a major increase in regulatory charges. We will have to increase prices and it will probably mean we reduce our recruitment plans, as well as significantly reducing the annual pay rises we are able to offer.” Legal firm

“The budget has had a significant negative impact […] I will not be in a position to recruit planned roles for at least 12 months.”

Business consultancy organisation