North East companies are innovating as they work through new challenges post-pandemic, research from the region’s largest business organisation has shown.
The latest North East England Chamber of Commerce’s economic survey results are released today, painting a picture which reflects the worries and concerns of the recent months. Yet while it demonstrates a challenging picture of regional economic conditions, the research also uncovers firms managing to adapt.
Sales, exports, investment and cashflow are nearly all now in negative territory as a number of economic headwinds impact North East firms. More than 90% of businesses said that inflation and energy prices are of significant concern, with staff costs and staff shortages not far behind.
READ MORE: North East economy returns to growth but business confidence plummets
The results show that the higher cost of operating has also made some reconsider investment decisions, while others have also experienced some short term cashflow problems, which the Chamber says is concerning as investment at the local and business level can improve productivity, innovation, and competitiveness. The survey’s workforce figures remain strong, highlighting the continued efforts to recruit, although the drop in the future workforce figure – down 14 points since the last quarter and 17 points since last year – suggests growing concerns around labour costs and recruitment difficulties.
Confidence around cash flow is also down – to -14 points overall for all companies responding, worse than the same time last year when it stood at -9.9 points. However the survey also shows businesses are taking positive action to deal with the impact of energy price rises.
A high proportion of respondents, 72%, said they were reducing energy usage by turning off equipment and 38% of firms were investing in new, more energy-efficient equipment. Significantly, 82% of businesses said they had taken action to try to reduce expenditure on energy, while 16% are changing work patterns to reduce energy usage on-site.
Andrew Haigh, Chamber president, said: “After a broadly optimistic start to the year, it is perhaps unsurprising that our second survey for 2022 paints a more challenging picture of regional economic conditions. This quarter we asked specific questions about energy costs and shone a spotlight on some of the positive steps firms are taking to reduce costs and consumption. The results showed businesses are using this as an opportunity to go green by using local energy generation methods such as solar panels. That resilience and creativity will be powerful as businesses deal with the challenging economic conditions ahead.
“One of the strengths of our survey is that it can highlight the important differences in experiences and perceptions of services and manufacturing firms. This quarter we can see that a little more sharply with manufacturing businesses feeling more neutral on the question of future profitability, compared to the service sectors’ relative optimism.”
Durham University Business School is the associate sponsor of the survey.
- Testerworld collapsed into administration owing more than £57m as sale hopes were dashed
- Singaporean sovereign wealth fund acquires majority stake in UK Land Estates for £425m
- More North East business news
Furniture Clinic to create new jobs after sealing £500,000 investment
Greggs reveals first eco-shop as part of 10-point pledge to make the world a better place
