There was a small rise in business confidence in the last quarter of 2023, according to a survey of UK companies.
The British Chamber of Commerce’s Quarterly Economic Survey shows that the percentage of firms expecting an increase in turnover during the next year (56%) had risen to the highest level since the first three months of 2022 – when Covid restrictions were lifted.
The data also reveals that more firms expect price hikes, ending the downward trend of the last two years.
The survey, conducted in November, involved 5,000 firms across the UK – 91% of whom are SMEs (fewer than 250 employees).
The percentage of respondents reporting increased domestic sales rose slightly to 36%, compared with 35% in Q3. Meanwhile, 22% reported a decrease and 42% said sales had remained constant.
There were significant sectoral differences reported. 46% of consumer services firms said they had seen a boost in sales, whereas 35% of hospitality companies and 28% of retailers saw a decrease.
Despite an improvement in profitability confidence with 47% of companies saying they expect profits to increase in the next year, most firms are still not reporting increasing investment in plant and equipment.
And while inflation remains firms’ biggest concern (58%), a recent trend in rising worries over interest rates has eased. A total of 39% of businesses say they are concerned about the cost of borrowing, compared with 41% in Q2 and 45% in Q3. These figures remain high compared with the pre-Covid trend.
Shevaun Haviland, Director General of the British Chambers of Commerce said: “Our data shows business confidence is growing, but real challenges remain in the coming year.
“Worries about interest rates and inflation remain at historically high levels, despite a slight easing of concern.
“The recruitment challenges many firms are facing underlines our calls for a skills plan from Government alongside an affordable immigration system.
“Investment continues to be the Achilles’ heel for business. The Chancellor’s decision in his Autumn Statement to make full expensing permanent was very welcome. 2024 needs to be the year when companies are given further assistance to invest. “In the noisy election year ahead, it is crucial politicians remain focused on growing the economy and helping businesses thrive.”
