Businesses in Wales have revealed the challenges they faced in the first half of the year.
Businesses participated in Chambers Wales South East, South West and Mid’s quarterly economic surveys in Q1 and Q2, sharing their experiences and thoughts on issues from international trade to recruitment.
The Chamber’s quarterly economic surveys are independent surveys of business sentiment and a leading indicator of UK GDP growth, with the results closely watched by policymakers.
Inflation Concerns amid rising utility and fuel costs
Inflation remains a significant cause for concern for businesses across the two quarters as reported by 83.95% and 69.51% firms respectively. By Q2, almost two thirds of businesses expected to raise the prices of their goods and services in the next quarter due to pressures like inflation, raw material costs and rising utility and fuel bills. These external factors have also played a role in the steady decline of export sales during the first half of the year.
Cautious Optimism despite challenges
While businesses seem to be optimistic on the whole that turnover will increase over the next twelve months, turnover confidence has taken a knock between Q1 and Q2 with an increase from 12.36% to 25.30% of businesses expecting turnover to decrease.
The size of workforces in Wales have mostly remained constant in 2022, reflecting the strong labour market. However, businesses are consistently experiencing difficulties finding and recruiting suitable staff; over three quarters of businesses have reported difficulties in both Q1 and Q2.
To overcome these challenges, over half of businesses in both quarters have identified new markets as the biggest opportunity to aid recovery and boost growth, followed by innovation.
Paul Slevin, President of Chambers Wales South East, South West and Mid, said: “It is clear from the results of our quarterly economic surveys that businesses in Wales are not out of the woods yet. Businesses are currently facing a perfect storm of difficulty including soaring inflation and rising fuel and utility costs as well as the cost-of-living crisis in a post Brexit trading environment.
“However, many businesses have demonstrated resilience and agility in recent years and are forward-thinking in how they might weather the storm. Businesses have identified access to new markets beyond the EU and innovation as key opportunities to aid recovery, and the Chamber is able to support in these areas. Knowing what businesses need to recover and using our expertise, we can help them rebuild confidence and plan for a future of growth.”