Latest survey confirms rising costs and tough trading conditions for businesses

The latest Buckinghamshire Business Barometer survey reveals surging business costs affecting a majority of local businesses, who are seeing worsening trading conditions over time.

The survey results suggest that the second quarter of 2022 was a negative one for many businesses, with worsening trading conditions and business performance, undoing some of the progress achieved following the end of Covid restrictions.

What were the results of the survey?

Responses to the survey – conducted by Buckinghamshire Local Enterprise Partnership and Buckinghamshire Business First – related to the second quarter of 2022 (April – June).

The Business Barometer survey asked Buckinghamshire businesses about areas where they are seeing rising business costs, and their severity.

All businesses that responded to the survey experienced a rise in business costs in at least one of the 13 areas identified*. More than half (57%) experienced surging business costs in at least six or more different areas.

*Energy; good/materials; transportation (within the UK); staff wages; increased red tape; staff training; prices of goods and services imported; recruitment; debt repayment; extra tariffs or taxes; transportation (importing goods and services); changing supply chains; setting up EU subsidiaries.

Where are businesses feeling cost increases most?

Cost increases were seen particularly in energy (90% of respondents) and goods/materials (81%), which, for the majority of respondents, translates into businesses passing on price increases to their customers and clients.

There is clear intent for a significant number of businesses to implement long-term price increases (12 months or longer).

Other areas of increased costs include:

  • Transportation (within the UK) - 73%
  • Staff wages - 61%
  • Increased red tape- 42%
  • Staff training – 42%
  • Prices of goods and services imported – 39%**

**A significant contrast was seen between the proportion of respondents that did (39%) and did not (3%) experience increased business costs related to the prices of goods and services imported, likely due to a combination of factors including Brexit, ongoing supply chain issues and the relatively more recent weak value of the pound making imports more expensive for UK businesses.

Cost increases are often large increases

More than half (61%) of respondents experienced a "large increase" in energy costs. This is considerably higher than the 19% of respondents in Quarter 3 (July to September) 2021 that reported a large increase in energy costs.

Large cost increases were also reported for: 

  • Goods/materials (17% in Q3 2021 to 43% in Q2 2022)
  • Transportation within the UK (9% to 30%)
  • Staff wages (7% to 18%)

The impact of Brexit on increasing business costs

The UK’s departure from the EU has contributed to increased business costs to an extent in areas such as increased red tape (42%), extra tariffs or taxes (31%), transportation (importing and exporting goods) (25%), changing supply chains (24%), and setting up EU subsidiaries (7%).

Debt repayments

Debt repayments have also increased for just over a third (34%) of respondents. As a proportion of turnover, and for the majority of respondents that have debt repayments, it sits below 20% of their turnover.

A smaller proportion of respondents said debt repayments were between 20% and 50% of turnover (6%), along with those reporting between 50% and 100% of turnover (3%).

When factoring in the increased severity of other business costs for the majority of businesses, debt repayments could become a more concerning issue, particularly if interest rates continue to rise.

What are business’s future plans?

The Barometer also asked Buckinghamshire businesses what their plans are for the next three months. Responses given contrasted with the encouraging improvements shown for the previous quarter, reflecting the current uncertainty for businesses.

For instance, just over half (55%) of respondents intended to invest in marketing/advertising over the next three months, down from 76% in the previous quarter.

Just over a third (34%) of respondents intended to increase their headcount over the next three months, down from 53% in the previous quarter.

An increasing number of businesses were planning to decrease their headcount (10%). This is up from 3% of respondents in the previous quarter.

Similar negative changes are reported across the majority of areas, including a big drop in the proportion of businesses intending to invest in equipment and machinery (24% - down from 48% in the previous quarter).

See the full findings

Full findings from the Buckinghamshire Business Barometer survey for the second quarter of 2022 can be found on the Buckinghamshire Economic Intelligence Observatory.

Help is at hand for businesses

Philippa Batting, Managing Director, Buckinghamshire Business First, said: “The Business Barometer results help us ensure effective support is in place to support our business community in these economically challenging times. Help is at hand for businesses that are experiencing tough trading conditions with our broad range of business support packages, grant funding and advice.”

Representing more than 40% of the county’s businesses, and more than 70% of the county’s private sector employees, Buckinghamshire Business First provides its 14,000 members with knowledge, support and opportunities for growth, which in the current economic climate is needed more than ever.

To speak to our Business Support Team, please email or call 01494 927130.

James Moorhouse, Economic & Labour Market Analyst at Buckinghamshire Local Enterprise Partnership, said: “As with each Business Barometer survey, the aim is to know how businesses have fared in the last few months in order to help build a picture of the needs and opportunities that exist in the Buckinghamshire business community. This valuable insight into the local economy is fed into our conversations with Government and other stakeholders to ensure the voice of Buckinghamshire’s firms is being heard nationally.”

Full findings from the Barometer survey for the second quarter of 2022 can be found on the Buckinghamshire Economic Intelligence Observatory.

The Buckinghamshire Business Barometer is a quarterly survey of Buckinghamshire businesses run by Buckinghamshire Local Enterprise Partnership and Buckinghamshire Business First.

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