UK business pessimism worsened by fears of sticky inflation
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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.
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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
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