UK business pessimism worsened by fears of sticky inflation

Published Fri, Oct 7, 2022 · 06:14 AM

BRITISH businesses are increasingly pessimistic about the coming year amid fears of lingering inflation and weak profits.

About 4 in 10 of companies expect profitability to drop over the next 12 months, according to the British Chambers of Commerce (BCC), the lowest level since the fourth quarter of 2020, when the economy was still being hit by pandemic lockdowns. One third expect profits to rise.

The BCC surveyed more than 5,200 businesses, most of which are small or medium-sized firms, prior to the Conservative government’s mini-budget on Sep 23 which triggered market chaos and forced the Bank of England to launch a new bond-buying programme.

“Diminishing sales coupled with soaring inflation is a toxic mix,” said David Bharier, head of research at the BCC. “Confidence will have taken a further hit following the market reaction to the mini-budget.”

Still, Bharier said that the government’s energy price cap for business will have eased pressure on companies.

Only 44 per cent of businesses expect sales to rise over the next year, the survey also revealed, down from 54 per cent in the second quarter of the year.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

VIEW ALL

Nearly two-thirds of respondents said they expect to keep lifting prices over the coming months, with inflation “showing no signs up letting up”. BLOOMBERG

KEYWORDS IN THIS ARTICLE

READ MORE

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to  t.me/BizTimes

International

SUPPORT SOUTH-EAST ASIA'S LEADING FINANCIAL DAILY

Get the latest coverage and full access to all BT premium content.

SUBSCRIBE NOW

Browse corporate subscription here