Lincolnshire Chamber Quarterly Economic Survey Q3 shows inflation is largest external pressure on businesses

The Lincolnshire Chamber of Commerce’s Quarterly Economic Survey – part of the UK’s largest independent business survey and a leading indicator of UK GDP growth – has found increases in UK economic activity but a further decline in overseas markets.

Running from 22nd August to 12th September, against a backdrop of continued energy crisis stories in the headlines, prices pressures and price cap forecasts for 2023, the survey presented a surprisingly improving picture, with improvements in confidence and performance.

Not surprisingly, inflation continues to be the largest external pressure on businesses currently, impacting 77% of respondents.

UK market figures have improved this quarter after a slow start to 2022 with both sales moving further into positive territory, shifting from +2 to +29 and orders increasing from -12 to +20.

Q2 were among the worst in relation to overseas markets, Q3 shows a slight improvement, with sales improving from -41 to 0, whilst order books for exporters remain a concern, where figures are still in negative territory; -45 to -31.

Recruitment is highlighted as a challenge for businesses as recruitment intentions in Q3 were in negative territory, moving from +16 to -3, coinciding with an observed slowing of jobs growth following a period of very strong recruitment.

Simon Beardsley, Chief Executive at Lincolnshire Chamber of Commerce, said: “Surprisingly we are seeing slight improvements across most indicators this quarter, however it is painstakingly clear businesses are feeling the effects of inflation, with the further expected rise in interest rates, businesses are growing even more concerned around affordability of borrowing, along with the pressure of wage increases to support their staff with the cost of living.

“While the subsequent energy announcement will have alleviated immediate pressure on firms’ energy bills, confidence will have taken a further hit following the market reaction to the mini budget.

“Whilst there is some positivity, it is clear from these results that businesses are struggling and currently without the light at the end of tunnel, so it is vitally important that businesses see some economic stability in order to build confidence to invest,”

Councillor Colin Davie, executive councillor for economy and place, said: “The global uncertainty around energy prices and other cost pressures is of course going to filter down locally. Businesses are anticipating lower profit margins, but many are taking action already to maintain their resilience in the face of multiple challenges. The recovery from the covid pandemic has been slow, with the conflict in Ukraine exacerbating the difficult trading environment. We’re continuing to provide practical support to businesses across the area to help them focus on long-term prosperity.”

View all figures by downloading the QES Q3 Report here.

Join our QES Q3 Briefing where we will discuss these results and the wider economic context, you can book via the link here.