Most firms have seen no boost to sales this quarter despite rising levels of confidence, a key economic report has revealed, as inflation remains the key concern for business.
The British Chamber of Commerce’s (BCC) quarterly economic survey (QES) found in spite of rising optimism, only a third of firms saw sales increase in the first three months of 2023.
Just 34 per cent recorded a rise, as 24 per cent saw a decrease and 41 per cent no change.
Almost half (47 per cent) of hospitality businesses found cash flow fell in the last quarter, with 38 per cent of retail firms recording a decrease in their last three month’s sales.
It comes despite an apparent dose of positivity, with more than half (52 per cent) of all UK firms believing turnover will grow in the next year and 42 per cent expecting bigger profits.
Research on the over 5,200 firms, mostly SMEs, was gathered ahead of Chancellor Jeremy Hunt’s spring statement, dubbed a ‘back to work budget’ aimed at rocket launching growth.
Hospitality and retail firms are consistently more likely to report worsening cash flow, investment and turnover than other sectors, the QES report found.
Meanwhile three quarters of firms surveyed before 9 March reported no increase to equipment or plant investment, and just 25 per cent planned to boost this in Q2 – the same as in Q2 2017.
David Bharier, BCC head of research, said improving business confidence was coming from a “very weak base” and was “yet to translate into an overall improvement of conditions”.
He said: “Three years of economic shocks – Covid lockdowns, global supply chain crises, inflation and Brexit – have taken a significant toll on UK SMEs.”
Events have “disproportionately impacted the retail and hospitality sectors,” he warned.
Shevaun Haviland, BCC director general, said while the budget included positive steps, it “did not go far enough to shift the dial on growth which remains stubbornly low”.
Government “failed to tackle” key issues holding back firms, she said, including help with energy costs dropping by 85 per cent and the tight labour market having a “corrosive” effect.