Pic: Lukassek / Shutterstock.com
Over half (52 per cent) of firms believed their business turnover will increase over the next 12 months, up from 44 per cent in Q3 2022. While profitability confidence also improved, it remained weaker than turnover confidence. 42 per cent of businesses expect their profits to increase over the next year, up from 34 per cent in Q4 2022.
A sectoral division in business performance was observed, with retail firms consistently more likely to report worsening cash flow, investment, and turnover than other sectors. The percentage of firms reporting increased domestic sales didn’t see any bounce back since it fell significantly in Q3 2022. Only one in three (34 per cent) firms experienced an increase in sales over the past three months, while 24 per cent reported a decrease, and 41 per cent reported no change. The retail sector remained particularly weak, with almost two in five (38 per cent) retail firms experiencing a decrease in sales over the past three months, as per BCC’s Quarterly Economic Survey for Q1 2023.
More businesses continue to report a decrease, rather than an increase, in cash flow, highlighting the precarious state many SMEs are still in. Only one in four (25 per cent) businesses said their cash flow has increased over the last three months, while 30 per cent have seen it decrease. The retail sectors are again facing the greatest challenges, as 40 per cent of retail firms reported decreased cash flow.
Three-quarters (75 per cent) of respondents reported no increase to investment in plant/equipment. Only a quarter of firms planned to increase investment in Q1 2023, the same level as reported in Q2 2017, according to the survey.
Inflationary pressures continue to ease slightly, but still remain the top concern. The percentage of firms expecting their prices to rise fell from 60 per cent in Q4 2022 to 55 per cent in Q1 2023. The overall level of concern regarding inflation dropped for the first time in over two years, but at 74 per cent, the level remained close to the historical high.
David Bharier, head of research at the British Chambers of Commerce (BCC), said: “After a significant decline in business confidence in the second half of 2022, results from QES Q1 show an improvement in business sentiment as political turmoil and inflationary pressures show some signs of easing.
“However, this comes from a very weak base, and while confidence has improved, this is yet to translate into an overall improvement of business conditions. Most SMEs still report no improvement to sales, cash flow, and investment.”
Fibre2Fashion News Desk (DP)