Some 56% of Somerset businesses surveyed by Somerset Chamber of Commerce are currently operating below capacity as supply chain issues, recruitment woes and price increases continue to bite.
Concerns about inflation remain the main concern for Somerset businesses, with 85% saying it is of more concern now than it was three months ago, an increase of 4% on the previous quarter. Some 42% of respondents said interest rates were more of a concern and 22% cited tax.
Almost 60% had attempted to recruit staff, with 60% of those experiencing difficulty filling vacancies – almost half of those were for skilled manual/technical roles and around 45% were for professional/managerial roles.
Business confidence remains rocky, with almost a third believing turnover will worsen in the next 12 months, while 43% think it will improve. Just under a third believe profitability will improve (32%) and 73% of respondents expect to raise prices in the next three months.
The findings are from the second quarter of the British Chambers of Commerce Quarterly Economic Survey (QES), which is organised in Somerset by the Somerset Chamber of Commerce.
It is the largest private sector survey of business sentiment in the UK and the local results feed into the national survey which are closely watched by key policymakers, including the Treasury and the Bank of England. It is the first QES since lockdown and the global Coronavirus pandemic.
Emma Rawlings, Chief Executive of Somerset Chamber of Commerce, said the results clearly pointed to a weakening economic outlook amid unprecedented cost pressures and falling business confidence.
She said: “Inflation remains by far and away the top concern, with the overall survey results going beyond anything we’ve seen before in the history of the data.
“Businesses face an unprecedented convergence of cost pressures, with the main drivers coming from raw materials, fuel, utilities, taxes, and labour. The continuing supply chain crisis, exacerbated by conflict in Ukraine and lockdowns in China, has further compounded this.
“Some sectors are far more impacted than others. Manufacturers, retailers, and hospitality firms have been sounding the alarm on inflation for 18 months.
“Against this backdrop, it is no surprise that business confidence for the months ahead is waning as we enter a period of heightened economic uncertainty.”
The Chamber network is lobbying the Government for action to help put the economy on a more stable footing.
“A cut in VAT on energy bills to 5%, and other steps to relieve the tax burden on firms to encourage investment are crucial.
“Better infrastructure, a plan to address labour shortages and a unified long-term economic strategy to give businesses more certainty are also needed,” Mrs Rawlings said.