Chamber News

Commenting on the Bank of England’s latest rise in the interest rate to 5.25%, Jack Weaver, Chief Operating Officer at Norfolk Chambers of Commerce, said: “Businesses across Norfolk will be hoping today’s rise in interest rates is the last they will see. “While many will have already factored this increase into their plans, it is clear the economic environment is becoming stacked against smaller firms which make up more than 80% of our membership. They are the ones with less cash reserves and greater exposure to the volatility we’re seeing. There are glimmers of hope however as data from our Quarterly Economic Survey (QES) shows that fewer than half (46%) of Norfolk businesses expect their prices to increase this quarter, down from 61% in the previous 3 months. So whilst there remains significant uncertainty, businesses across our county are feeling modestly more confident about the future. We are also likely to see a further substantial fall in inflation in July as last year’s energy price rises drop out of the data. While inflation remains the top concern for Norfolk firms overall, interest rates have emerged as the second top concern, with 41% citing this as more of a worry than three months ago. Norfolk also remains over-exposed to volatility in sectors experiencing the biggest uncertainty. The tightness of the labour market is most significant in hospitality and tourism, agriculture and health & social care, further fuelling concern about skills, recruitment and talent retention. All of which stymies business growth. Our members and the wider business community in Norfolk will be watching closely for any further indications on the Bank’s plans and hoping this rate rise will have the desired impact on their inflationary pressures.”

• Government must fix people problem to ease inflation and take pressure off interest rate rises

• 79% of businesses surveyed (92% of whom are SMEs) attempting to recruit have faced challenges, with hospitality and construction firms the most likely to report difficulties

• Three in five (60%) businesses attempted to recruit in the quarter 

The latest Quarterly Recruitment Outlook (QRO), a survey of 4,800 UK firms of all sectors and sizes by the British Chambers of Commerce (BCC) reveals there is still no easing in the record high difficulties in finding staff. The second quarter results for 2023 show that the percentage of firms facing recruitment difficulties has fallen just three percentage points from the historical high of 82% in Q4 2022. This has now remained above 75% for the last two years. Attempted recruitment in Q1 was virtually unchanged from the previous quarter, with 60% of those surveyed looking to find staff (59% in Q1 2023). While recruitment difficulties are being experienced across the economy, the construction & engineering, and hospitality sectors were the most likely to report problems with 86% of firms reporting difficulties (up from 81% and 83% respectively in Q1). This is closely followed by manufacturing on 81% (83% Q1) and then professional services on 77% (79% Q1). Of the firms in the construction & engineering sector facing recruitment difficulties, 76% faced difficulties in finding skilled manual/technical workers. However, for hospitality businesses that struggled to recruit, 69% faced difficulties in finding semi/unskilled workers. Investment in training remains stubbornly low with just over a quarter of firms (27%) reporting an increase in their training investment plans over the last three months (the same as Q1), while 14% report a drop (also the same). In terms of cost pressures, the data show that the main factor for increasing prices is now coming from wages rather than utility bills or raw materials. With concern around utility costs dropping, 63% report these as an issue (74% in Q3 2022), the number of firms reporting labour costs as a source of pressure has risen to 68% (67% in Q1) and is now the lead cost pressure.   Although, overall, the percentage of firms expecting their prices to rise fell below 50% for the first time since Q3 in 2021. Responding to the findings, Jack Weaver, Chief Operating Officer at Norfolk Chambers of Commerce said: “The tight labour market continues to push up wage costs, fuelling inflation, and creating huge difficulties for businesses looking to recruit. In Norfolk, our already squeezed businesses also face the issue of a shrinking workforce as the working age population in our county declines in a way not seen in much of the rest of the country. In our focus groups and engagement events with Norfolk businesses, recruitment difficulties are consistently cited by as a major barrier to growth, meaning firms cannot fulfil order books and are turning down new work. Added to this, the national picture shows acute issues in hospitality, construction, health and social care and other sectors heavily reliant on labour from overseas. These are all sectors on which Norfolk’s economy is heavily dependent, so we need to see consistent and pragmatic immigration policy from government and the opposition to give our businesses confidence in the future.

Commenting on the Electronic Trade Documents Act receiving Royal Assent, BCC Head of Trade Policy William Bain said:  “Campaigners have worked for years to have the Electronic Trade Documents Act passed, and its introduction in mid-September will a mark transformational change in digitalising international trade.  “The BCC will work with our colleagues in the International Chambers of Commerce, and with Chambers and businesses across the UK to ensure the full benefits of digitalisation are felt in increased global trade.  “This new era begins in the UK, but it can also act as a beacon, leading towards further digitalisation of trade across the world. We also urge governments to accelerate their work to digitalise border processes. “In our new Trade Manifesto, we called on Government to work with business to ensure 60% of the UK’s exports are carried out digitally by the end of the decade.” About The Act The Electronic Trade Documents Act gives legal status to electronic Bills of Exchange and Bills of Lading and other commercial documents. The new legislation will come into effect in mid-September this year providing opportunities to digitalise international trade documents and reap efficiency benefits. It also covers trade documents such as promissory notes, warehouse receipts, marine insurance policies, and cargo insurance certificates. 

Responding to the launch of a UK Government consultation on negotiations for an upgraded trade agreement with Turkey, BCC Head of Trade Policy William Bain said: “It is good news to see this statement of intent to deepen UK trading terms with Turkey. It is our 18^th largest bilateral trading partner worth £23.5bn in total trade in 2022. “Currently, three quarters of UK exports to Turkey are in goods, so a key aim of these negotiations must be to keep that secure while expanding scope for services exports. “An upgraded free trade agreement must focus on being match-fit for the 21^st Century. This means negotiating new arrangements on services, business and labour mobility, green trade and digital trade. All areas we flagged in our new Trade Manifesto. “Only 6% of UK VAT registered exporters trade goods and services with customers in Turkey – a refreshed agreement needs to work in practice to raise that share.” The UK’s current trade agreement with Turkey was a roll-over deal reached a few days after the Trade and Co-operation Agreement (TCA) between the UK and the EU was made in late December 2020. Turkey has a partial customs union and regulatory relationship with the EU which forms the background to what can be negotiated with the UK. Mr Bain said: “Issues around rules of origin are being consistently raised by UK companies trading in the European neighbourhood. The BCC would like the UK to join the Pan-Euro Mediterranean (PEM) Convention which would offer greater flexibility for traders seeking to sell manufactured goods in the EU, Turkey, and the rest of the European neighbourhood within the Convention. “There will also be an overlap therefore between trade issues we would want to agree bilaterally with Turkey, and the wider review of the operation of the TCA in 2025/6. “As these negotiations look to get underway later this year, securing a future looking, upgraded set of trading terms with Turkey is a key part of achieving closer economic relations for UK businesses across the European neighbourhood in the coming years.” The existing UK-Turkey continuity trade agreement can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/963851/CS_Turkey_1.2021_UK_Turkey_Free_Trade_Agreement.pdf

We hear a lot from our SME businesses that accessing government funding support and the wider routes to finance can be tricky. If that sounds like you, then UK Parliament’s Treasury Select Committee want to hear from you! Have your voice heard and submit evidence to the Treasury Committee. The Committee will examine the accessibility of finance and lending to SMEs, by considering the key challenges SMEs face when seeking finance, the regulation of SME lending and the role Government can play in enhancing lending to SMEs. Submit your answers here  

After securing the works contract last year, Vattenfall has made the decision to stop work on Norfolk Boreas Offshore Wind Farm. The project has come to a halt due to rising costs caused by inflation, rendering the offshore wind farm project financially unviable, with two other sites: Vanguard East and Vanguard West also being reviewed. Vattenfall is one of Europe’s largest producers and retailers of electricity and heat, operating 10 wind farms across the UK. Vattenfall planned to construct the Norfolk Boreas Offshore Wind Zone off the coast of Norfolk, providing power to more than 4 million homes in the UK. Jack Weaver, Chief Operating Officer at the Norfolk Chambers, said: “Like all businesses operating in Norfolk, Vattenfall are being squeezed by multiple macro-economic pressures. Stubbornly high inflation, rising interest rates, a very tight labour market and an increasingly uncertain policy environment are undeniable, but this decision will not have been taken likely. Nevertheless, it is unfortunate to see such a significant expansion of our offshore renewables offer hitting pause. This decision will not impact on the positive relationship Norfolk Chambers has with Vattenfall, and we will continue to engage positively with them to ensure Norfolk businesses still benefit from the win-win scenario of investment in the drive to Net Zero.”

Reacting to the latest GDP data from the ONS, Alex Veitch, Director of Policy at the BCC, said: “Today’s data show that while consumer price and core inflation remain stubbornly high, businesses’ input prices have fallen. “While firms’ costs are now much higher than a year ago, the fall in the input rate will give some hope that consumer price inflation will soon start to ease. However, the drivers of price rises have shifted with labour costs now the most significant factor. This may slow down the rate of CPI decline – due to the high number of job vacancies. “Our latest Quarterly Economic Survey in July, of 5,000 businesses, showed that fewer firms are now expecting their prices to rise, and while inflation remains the top concern, the numbers worried have been falling since the end of 2022. “The drivers of inflation are diverse with most (68%) now citing labour costs as a key pressure, 63% citing utilities, and 45% citing raw materials. Labour costs may remain an issue for business for some time; although the figure has been steadily falling, there are still around 1 million job vacancies in the UK. “However, for manufacturers, 75% cited raw materials as the main cost pressure, and hospitality firms were far more likely than all other sectors to cite utility costs as a worry. “But overall, our data show there has been optimism building in the business community that future prices rises might not be inevitable. Today’s ONS findings will be an important factor for the Bank of England to consider going forward.” The full ONS data can be found here for CPI and here for PPI.

The British Chambers of Commerce oversees a dynamic Network of 53 accredited UK Chambers with affiliates in over 75 international markets committed to creating a platform for businesses to shape the economy for the better. We firmly believe that international trade can make every company a better one. With more than 160 years of experience in the world of trade we know that once you open the door to overseas exports, then the possibilities for expansion are endless. That’s why we want to build a business community in the United Kingdom where more than half of firms export. Our Chamber Network already does that, and we want to help thousands more do it too. In 2022, there was a continued expansion in UK services exports across the world – cementing our place as the globe’s second largest exporter of services. That needs to grow further. Now we need our goods exports to experience greater growth in the coming years. View the Trade Manifesto 2023 below!

On 3^rd July, Evander Norwich welcomed the Norfolk Chambers to their office for another in our series of Focus Groups. Joined once again by James Ingham and Jonny Spinks from our sponsor UPP, the group was chaired by Chambers Board Member Carole Burman (MAD-HR) who led the group through a variety of topics. Impacts of ageing infrastructure and next-level connectivity Once again, the topic of connectivity in a largely rural county elicited a wide range of opinions – while some present have great connections, others are more isolated and cannot rely on a stable connection which can have potentially embarrassing results while talking via video call. Even those with access to a full-fibre connection cannot always get a good phone signal, meaning that going on the road either when meetings potential clients or at trade shows has its risks, including losing sales.  It was suggested that, just as Royal Mail has an obligation to deliver to all UK addresses, perhaps there should be an obligation to provide a fast internet connection as well, meaning physical location has less bearing on where business can and cannot be done. What is most challenging at the moment? With the current economic climate providing a number of challenges, the biggest was considered to be a combination of government policy and a rise in interest rates. Changes in how businesses can spend their money affect how they can run, and with uncertainty comes the additional challenge of not being able to plan effectively. There was a consensus that it currently takes a lot more work to remain at the same level than it has done in the past. Cost of living crisis and its effects Although primarily a business-focused discussion, it is impossible not to see how further challenges in peoples personal lives can affect their business decisions. The cost of living crisis has meant people have cut back, while the feeling within the group was that they should now be focusing more than ever on promoting their businesses. If you would like to join us at one of our Focus Engagement Groups you are more than welcome to do so. They are free to attend and take place around the county. The next Focus Group will be taking place at Downham Market on Friday 14^th July – book your place here. Our Focus Groups are kindly sponsored by Upp

Responding to the Chancellor’s Mansion House speech announcing reforms of the pension market, BCC Director General Shevaun Haviland, said: 

“Boosting investment is key to remaining globally competitive, increasing economic growth and strengthening UK capital markets. Therefore, we very much welcome the proposals set out by the Chancellor in his Mansion House reforms, making it clear that the UK is where business belongs.  

‘It is right that the Chancellor is looking at the pensions market and how reform can foster growth and investment. As the largest pension market in Europe, regulation has only ever been part of the story, with the ability to scale up key for unlocking investment.” 

“A better funding environment for businesses will allow the growth of UK plc and should see an increase in the number of companies publicly listing here in the UK, following a recent decline.   

“Challenges around public investments, such as HS2, illustrate the importance of leveraging more private sector investment into UK infrastructure projects, which can complement the UK’s already strong track record in encouraging private investment into infrastructure such as maritime ports, water supply and airports. 

“Green financing must be an area of particular focus, with increased investment needed for both large-scale green infrastructure projects, as well as green innovations. 

“However, we can’t forget about channelling investment into our local economies and supply chains. With SMEs accounting for 80% of the UK’s economy, these businesses must also benefit from easier access to capital funding.” 

• Less than half (46%) of Norfolk firms expect their prices to increase in the next three months, down from 61% in Q1.
• Labour costs are the biggest driver of price rises, cited by 83% of businesses.
• Domestic sales fell across the board with a significant drop in the manufacturing sector
• Cashflow, turnover and profitability indicators all remain volatile when compared to Q1.   

The BCC’s Quarterly Economic Survey (QES) for Q2 2023 shows that less than half of firms now plan to raise prices in the next three months as cost pressures ease. But the data also reveals that the main factor for increasing costs is now coming from wages rather than utility bills or raw materials. The survey, by the BCC’s Insights Unit, of over 5,000 firms, including those in Norfolk – 92% of whom are SMEs – also reveals business performance across different sectors varies considerably, with hospitality and retail firms suffering more widely from cashflow difficulties. The research took place between 15 May and 9 June and before the Bank of England increased the base rate to 5%. Respondents were split into 29% manufacturing and 71% services industries, with 47% exporting. Growth in business activity remains weak, with no significant improvement to sales and cashflow data. The percentage of Norfolk firms reporting increased domestic sales fell to 32% (compared to 38% in Q1). The most notable drop was in manufacturing, where sentiment fell from 39% to 26% from Q1 to Q2. Meanwhile, 32% of Norfolk firms reported no change. For cashflow, just under half of Norfolk businesses (45%) reported no change whilst 30% reported a decrease. The picture remains volatile since Q1, with noticeable variation between sectors. Pressures remain highest in the retail and hospitality sectors with 38% and 37% respectively reporting reduced cashflow, which highlights the acute challenges being faced by Norfolk’s tourism industry. Meanwhile PR and Marketing was the most positive sector with 33% reporting growth. After business confidence showed signs of a rebound in Q1 2023, it has now stalled again for some in Norfolk, but there are sectoral differences which add to the volatility. Whilst nationally there was improved confidence in turnover increasing over the next 12 months, there was no visible change in the confidence of local firms, remaining static at 44% for both Q1 and Q2. Nationally, profitability confidence also improved slightly to 44% from 42% in Q1, but it continues to remain weaker than turnover confidence. In Norfolk, the picture was much more fluid and confidence varied depending on the sector. This slightly improved national outlook was not translating through to increased business investment. The number of Norfolk respondents reporting an increase in investment in plant/equipment did not change significantly, with a marginal drop from 27% in Q1 to 26% in Q2. Nationally, over the last six years this measure has dropped as low as 9% of firms, at the start of the pandemic, but it has never gone higher than 28% (Q1 2018). Inflationary pressures continue to ease, but still remain the top concern. The percentage of firms expecting their prices to rise fell below 50% for the first time since Q3 in 2021. It has fallen from 60% of firms in Q4 2022 to 45% in Q2 2023. The figure for Norfolk businesses this quarter is broadly similar with 48% expecting prices to rise in the next 3 months. While inflation remains firms’ biggest concern, the level has dropped for the second quarter running, with 69% of firms now worried compared to 74% in Q1. However for Norfolk businesses this concern remains stubbornly high at 82%. However there has been a corresponding 5 percentage point rise in businesses worried about interest rates, increasing from 36% in Q1 to 41% in Q2. Labour costs are now the number one cost pressure for businesses. With concern around utility costs dropping around the country, 63% report these as an issue (74% in Q3 2022). Yet again the drop is less noticeable in Norfolk with 70% saying this remains a top priority. Meanwhile the number of UK firms struggling with wage costs has risen to 68% (67% in Q1) and is now the lead cost pressure. But there remain wide sectoral differences with 75% of manufacturers citing raw materials as the main factor driving price increases, while in hospitality, 85% of firms were most worried about utility costs. The retail sector was least worried about labour costs, with 56% citing it as an issue, against 64% flagging utilities and 67% raw materials. This is further evidence of ongoing volatility across sectors, but more worryingly it highlights a level of over-exposure of some of Norfolk’s most important sectors within the visitor economy – namely hospitality, accommodation, tourism and retail. Jack Weaver, Chief Operating Officer at Norfolk Chambers of Commerce said: “Once again, data from the Quarterly Economic Survey shows ongoing volatility in key business indicators in our county. “Three years of economic shocks in the form of Covid-19 lockdowns, inflation, and a new trading arrangement with the EU have placed clear obstacles in the ability of Norfolk firms to trade and grow. “Now many local businesses face further pressure following interest rate rises, as borrowing costs increase. Predictably, investment in many sectors suffers in such tough conditions. That said, there are silver linings to be found in local manufacturers still feeling able to invest in equipment and training and a slight drop in prices across many sectors. “Despite the national picture of business confidence remaining buoyant, Norfolk firms are currently less optimistic about the future, particularly around recruitment of so-called ‘unskilled’ and clerical roles. “There are tentative signs that optimism around profitability is recovering and the concerns about some macro-economic issues are easing. Given that this is relative to three years of real difficulty for Norfolk firms, we now need to see their confidence reinforced with greater clarity from the government and the opposition on a plan for economic growth.” Responding to the findings, Director General of the British Chambers of Commerce, Shevaun Haviland, said:  “With inflationary pressures weakening, but wage cost concerns remaining high, our research should give the Government and Bank of England pause for thought on their next steps. “There is a fine balancing act to be struck here. Push too hard on interest rates and there is a real danger that the long-term outlook for economic growth and prosperity will be dented. “The Bank of England has itself identified the tight labour market as a key factor in the UK’s stubbornly high inflation. “Fierce competition for skills, wage demands and candidates’ expectations leave many businesses with job vacancies they can’t fill. “The Government must redouble its efforts to get people back into work and create the right conditions for employers to invest in staff training and development.  Where firms cannot recruit and train from their local or national labour market, a flexible, efficient and affordable immigration system is crucial. “Further upcoming changes on trade with the EU, such as new customs requirements and charges for imports, will also add upward pressure on prices. We need to think carefully about adding in further costs for businesses when they are already under strain.” Have your voice heard for Q3 The QES often shows changes in economic trends, well in advance of other surveys. It is used by the Bank of England to set interest rates and the Treasury and the Chancellor of the Exchequer when considering national economic decisions. The survey takes less than 3 minutes to complete online, it’s multiple-choice and anonymous. Sign up here to receive a link when the fieldwork opens in August. 

This year, for the first time, the Norfolk Chambers created the Norfolk Business Hub designed for SME’s to showcase their businesses to the local community at the UK’s largest county show, the Royal Norfolk Show. The Hub sponsored by Solinatra, united 28 Norfolk businesses and provided them with the opportunity to raise their brand awareness and connect with thousands of attendees all under one roof! The Hub was buzzing with activity as amazing businesses from all around Norfolk gathered to exhibit their products and services. It was a fantastic opportunity for them to connect with other local businesses and network in the Co.llaborate Zone, a space furnished and sponsored by iQ Workspace. Check out their amazing office furniture, including their meeting pod on slideshow 2 below! During the two days, we hosted several networking events to provide opportunities for meaningful conversations. These included two lunchtime networking sessions, a breakfast event, and an informal sunset drinks reception sponsored by Norse Group, with the support of Norfolk County Council and Black Shuck. To close the show’s second day, we also hosted an afternoon drinks reception sponsored by The Thomas Paine Hotel. James Groves, Managing Director at Indigo Swan said “The Norfolk Business Hub provided us with a wonderful base over the two days we were able to connect and speak to clients, partners, and new opportunities alike. It was a buzz of energy. Thank you to the Chambers team for making it a fantastic event.” Thank you to all of our stand holders who contributed to the huge success of the Norfolk Business Hub. Impact Services, Fleetsense, Orange Heating Supplies, iQ Workspace, Solinatra, NR Medical Training, Jo Hearle Make-up Artist, Eastern Landlords, Evander, Indigo Swan, Cryogenic Industrial Gases Ltd, Adult Learning, Wensum Print, TPG Passive Fire Protection, East Coast Hideaways, Sales Geek Norwich Limited, KonectBus Ltd, jbj associates, MAD-HR Ltd, The Maid’s Head Hotel, Door to Door, M Brock LTD, IP21, Credo Capital Finance, Pavillion Theatre & Bandstand, Cedaro, Seneye, and Westcotec. A huge thank you to our headline sponsors, Solinatra, and our Co.llaborate Zone sponsors, iQ Workspace, who played a vital part in creating the most inviting and unique space within the Hub where people could relax, catch up, and take a break from the rain showers! Their meeting pod was the talk of the Hub as well as their ukulele that was thankfully kept in the sound-proof pod! Amy Wright, Events Manager at Norfolk Chambers said “The Norfolk Business Hub came alive at the Royal Norfolk Show, and it was fantastic to see so many connections and conversations made in the Hub. It was key to showcase exactly what the Norfolk business community provides.” We also want to extend our thanks to the Royal Norfolk Agricultural Association for being such supportive sponsors of the Norfolk Business Hub. Missed out exhibiting in the Hub this year? Want to be a part of it for 2024? Register your interest here. Don’t forget to sign up to our newsletter to keep updated on all our exciting upcoming events.