The latest economic report from Chambers of Commerce in West & North Yorkshire highlights significant concerns over rising inflation from raw materials and energy. Recruitment challenges too are adding further costs as companies plan for growth. And yet, despite all of these head winds underlying domestic demand remains strong for the moment with early signs that international trade activities may start to improve as travel restrictions begin to lift. Fieldwork took place as Russian force invaded Ukraine and is reflected in this quarter’s results, most notably around the exponential rise in raw materials like metals and fertiliser.
Amanda Beresford, Chair of West & North Yorkshire Chamber of Commerce, said of the results: “This quarter we report on the perfect storm which our regional business community is facing.
“This is almost entirely driven by supply side challenges as raw materials, shipping disruption, rising energy costs, haulage costs and labour shortages are all contributing to increasing the costs of doing business. This is further impacted by global Covid spikes and the tragic war in Ukraine, all of which follows the most challenging two years for business.”
“Short term, inflationary pressures will have a material impact on company cash flows and likely hinder their recovery. Longer term business confidence remains largely unchanged from the last quarter as companies try and see beyond the next 6-12 months.”
Martin Hathaway, MD of Mid-Yorkshire Chamber of Commerce said, “The pressures that are currently facing businesses are strong but I am confident that our economy can weather the storm.
“Despite the challenges, our firms here in Yorkshire remained confident throughout quarter one, which is a positive sign as net balances remained at pre-Covid levels throughout.
“Desire to invest and recruit is there; we just need to see greater support and options for those looking to level up their businesses.
“We hope to work more closely with local authorities and Government in the coming months to create a stronger, more inclusive workforce to seal Yorkshire’s future as the place to do business in the UK.”
Sir Roger Marsh OBE DL, chair of the Leeds City Region Enterprise Partnership and NP11, said, “Alongside labour shortages, businesses are facing rising inflationary pressures last seen in the early 1990s. Energy and utility prices are reported as a major problem facing businesses, particularly those in energy-intensive manufacturing. Many commodity prices have recently increased due to the war in Ukraine, particularly those found in Ukraine and Russia, such as wheat and nickel. Delays at ports in China due to Covid lockdowns is adding to these economic headwinds, with data suggesting that congestion at two Chinese ports is at its highest level in five months”
Further details and the Chamber’s full QES report can be found online