In its latest quarterly economic survey, West & North Yorkshire Chamber of Commerce reveals research of how business took a hit from tax hikes in Rachel Reeve’s first budget.
That and minimum wage rises have led many businesses to expect lower profits, with many also putting recruitment and investment on hold.
The chamber says taxation is now by far and away the principal cost pressure facing businesses in the region, with labour costs and inflation also high on business leaders’ agendas.
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The manufacturing sector in particular fared worst, with sales, orders, recruitment and investment now at the lowest level since the height of the pandemic.
Amanda Beresford, chair of West & North Yorkshire Chamber of Commerce, confirmed: “Business confidence declined in the final three months of 2024, with employers reporting declining sales, reduced hiring intent, expressing a shrinking appetite for investment and reducing forecasts when it comes to profits.
“Indeed, one needs to travel back to the hight of the pandemic to see such poor levels of sentiment among businesses.
“Although firms have become accustomed to uncertainty over the past eight years, they still do not have the stable platform upon which sustained economic growth can be achieved.
“Let us hope optimism returns in the months ahead and that we finally as a country get back to growth.”
After seeing their overheads increase, the number of business leaders expecting profits to grow in Q1 of 2025 has fallen considerably, most notably for manufacturers whose optimism fell to the lowest level since the pandemic.
After a decent period of performance during 2024, sales volumes for manufacturers fell off a cliff edge, with order books also at a four-year low. Service sector firms, however, improved their sales performance to the highest level in two years, although order books remain flat.
Both service sector firms and manufacturers saw a marked decline in their overseas sales, with order books also in decline.
On hiring intent, the chamber again reports a return to pandemic levels. With sudden sharp rises in the cost of doing business, it seems investing in new staff is currently off the table for many employers.
Capital investment is also on hold, with the chamber reporting the sharpest decline in investment plans in four years and the appetite for allocating money for new capital investment evaporating.
But manufacturers are training staff more, perhaps due to plummeting hiring intent.
The chamber adds taxation is by far the top external issue facing firms, with generationally-high levels worsened by national insurance changes announced in the budget putting them at “eyewatering levels.”
Elsewhere, labour costs top the list of cost pressures, again something which the Budget’s increase in the minimum wage will have added to.
