We must not let inflation undermine South Yorkshire’s renewal say region’s business leaders

4th July 2022

On the publication of the South Yorkshire Quarterly Economic Survey (QES) for Q2 2022, the CEOs of Barnsley & Rotherham, Doncaster and Sheffield Chambers of Commerce said in a joint statement:

‘We’ve seen many positive developments in South Yorkshire’s business environment over the last three months. Major inward investment successes like Hybrid Air Vehicles; a landmark economic summit; city status for Doncaster; the launch of the region’s Local Skills Improvement Plan and our People & Skills Manifesto for transforming the economy. All these and more have added momentum to South Yorkshire’s economic renewal. Our survey reflects some of that positivity. Business investment is outperforming the UK. Sales and orders picked up in Q2 after dropping in Q1 and firms continue to want to grow their operations and hire more people.

‘But we can’t ignore the clear signs that concern about inflation is growing fast. As for the UK as whole, historically high shares of firms responding to the QES expect price rises soon and see inflation as a threat. They know a further rise in the energy price cap is in store this year. Employers are in active discussions with staff about mitigating the rising cost of living. They face mounting economic uncertainty and this is undermining confidence. The shares of responding firms that expect profitability and turnover to increase have fallen to their lowest in over a year. Recruitment difficulties also remain at historically high levels and underscore the importance of progressing our plan for skills.

‘In our People & Skills Manifesto we call on South Yorkshire’s new Mayor to use his influence to progress the Local Skills Improvement Plan. This demands new ways of working across business, government and the education and skills sectors. We are committed to that and our survey shows this is one of the top priorities businesses have for the Mayor too. We need the UK government to avoid loading new costs onto business, reduce upfront price pressures (such as VAT on energy) and re-double efforts with overseas partners to address bottlenecks in international trade. They can take a big step to bolster confidence in our region by awarding Doncaster as the home of the new Great British Railways HQ.  South Yorkshire’s rail and logistics cluster has huge growth potential for our region and the UK. GBR would open up many new opportunities for business investment and industry collaboration.’

Highlights from the survey:

On the economic outlook

  • The percentage of businesses operating at full capacity increased to 55% - the highest since before the pandemic
  • 68% of firms reported that price increases were expected over the next three months, the highest for over two years
  • 62% of firms reported that inflation was more of a concern than three months ago – up from 21% the same time last year.
  • 60% of responding companies tried to recruit in Q2 but the majority continued to report recruitment difficulties (87% - down only slightly on Q1’s high of 93%)

On priorities for new Mayor Oliver Coppard’s first 100 days in office

  • The top priority, selected by 57% respondents was a future economy strategy – investing in people and businesses in key sectors like advanced manufacturing, health technology, creative and digital
  • The next most popular was improving workplace skills, such as delivering on recommendations set out in the Local Skills Improvement Plan (LSIP) and People & Skills Manifesto (41%)

On the cost of living crisis

  • 65% of responding businesses have had formal or informal discussions with their employees about the cost of utilities; 59% have discussed the rising cost of petrol and 45% have talked about the cost of food and other essentials.
  • 52% responded that they were increasing wages to help employees with the rising cost of living

 

QES survey results were drawn from 304 responses collected over 16 May to 10 June 2022.

Click here to see the full south yorkshire quarterly economic survey q2 2022

Click here to see the latest policy briefing

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