Business sentiment in Norfolk has fallen sharply as new data from the British Chambers of Commerce Quarterly Economic Survey (QES) for Q1 2025 reveals mounting concern over rising tax burdens and slowing growth.
The findings, based on responses from more than 5,000 UK firms, including organisations in Norfolk, highlight the impact of the recently introduced national insurance hike and continued cost pressures, prompting warnings about reduced investment, subdued confidence, and widespread price increases.
– 66% of Norfolk businesses say tax, including national insurance, is now a concern, the second highest level on record following a peak in the previous quarter
– Business confidence remains subdued, with less than half of UK firms (48%) expecting turnover to increase in the next 12 months
– A third (34%) of businesses have cut back on investment in the past three months, while only 20% have increased investment
– 74% of Norfolk firms are expecting to put up their prices over the next three months, with labour costs continuing to be the main driver.
The British Chambers of Commerce Quarterly Economic Survey (QES) for Q1 shows that business sentiment remains very weak as taxation continues to be the top concern.
66% of Norfolk’s surveyed firms cite it as a worry (compared with 63% in Q4 2024), the second highest level on record.
Business confidence remains low, with only 23% of Norfolk businesses expecting turnover to increase over the next 12 months, way below the national figure of 48% (a figure itself down from 49% in Q4). In comparison, pre-Budget confidence was 30% for Norfolk businesses in Q2 2024 and 36% in Q3 2024. Nationally, confidence levels are lowest in the retail industry (38%) and the transport and logistics sector (40%).
The survey was carried out before the recent Spending Review, with the fieldwork conducted between 10 February and 10 March. The data from over 5,000 businesses across the UK (including those in Norfolk, of whom 88% are SMEs) also shows that most firms are expecting to raise prices.
Tax remains the top concern, with inflation still a worry
With the national insurance rise now in effect, concern about taxation remains the main concern for businesses – cited by 66% of responding firms in Norfolk. Yet this is down slightly from 75% in Q4 2024. This is the second highest level of tax concern since 2017, when the BCC started asking this question. The levels in certain sectors around the country are higher, with 68% of transport and logistics firms and 64% of production and manufacturing businesses raising tax as a concern.
Concern about inflation has reduced slightly since the previous quarter – 46% compared to 49% in Q4. Concern about inflation is most prevalent in the construction industry, with 57% of firms identifying it as a concern. Worry about interest rates has dropped slightly to 23%, compared to 25% in Q4.
Business confidence remains subdued following Budget measures
Business confidence in Norfolk has fallen further since the immediate aftermath of the Budget, with 44% of our county’s firms say they expect their turnover to increase in the next twelve months. Across the UK, the figure is 48%, which is the lowest since the aftermath of the mini-budget in late 2022. A fifth (21%) of UK businesses expect turnover to worsen (the same as Q4), and 31% expect no change.
Profitability confidence for our local businesses also continues to be hit. 36% of firms expect profits to increase over the next year (virtually unchanged from 35% in Q4), while the same number of businesses expect them to fall has gone up (36% in Q1 vs 32% in Q4).
Most businesses are planning to raise prices
Nearly three quarters (74%) of Norfolk’s responding firms say they expect to raise their prices in the next three months, a big increase on the 44% Q4. While 55% of businesses expect prices to stay the same, and only 1% expect them to decrease.
Labour continues to be far and away the main cost pressure for firms across the county, cited by 85% of businesses (83% in Q4). Looking nationally, the issue is most significant for the production and manufacturing sector, with 82% reporting it as a challenge, followed by 81% of firms in the transport and logistics sector alongside hospitality businesses. All of which are major employers in Norfolk.
More firms have cut back on investment plans
As local businesses navigate rising cost pressures, 34% of responding firms say they have cut back on investment plans in the past three months, up from 28% in Q4. A mere 12% of businesses say they have increased investment plans, a big fall from the 25% in Q4.
The issue is more marked in certain sectors around the UK, with 40% of hospitality firms and 35% of retailers reporting a scaling back of investment plans.
Business conditions struggle
The percentage of respondents reporting increased domestic sales has actually increased slightly to 27% compared to 22% in Q4, bucking a national downward trend. 44% reported no change and just under one third (29%) of firms said they had seen a decrease in sales. Nationwide retailers were the most likely to have seen a fall in sales (37%) followed by manufacturers and hospitality firms (35%).
A third of businesses (43%) report a fall in cash flow over the last three months, up from 34% in Q4. Meanwhile, an unprecedented low of 13% of firms have seen an increase, while for 44%, cashflow has remained the same.
What Norfolk businesses say:
Medium-sized consultancy business – “Rise in National Insurance will be a significant hit.”
Medium-sized accountancy business – “Tax changes are severely damaging profitability, and this will feed through to salaries and pricing.”
Micro retail business – “Tax burden is even more evident this, and I fear for the future.”
Large tourism business – “We have chosen as a business to retain our headline pricing, but have increased some costs due to investment and staffing costs. We have reduced costs and delayed some recruitment.
Medium-sized manufacturer – “Noticeable drop-off in domestic business since last Autumn, and competition is dropping prices significantly to gain work and keep ticking over.”
Small environmental consultancy – “We operate in the sustainability market, and the current Net Zero fatigue and geopolitical rhetoric is a concern.”
Jack Weaver, Chief Operating Officer at Norfolk Chambers of Commerce, said:
“It’s obvious that business sentiment has been at a low ebb following the Autumn Budget last year, and this new dataset shows no improvement to that. By several of the metrics, we have seen a further worsening across the country. For many Norfolk businesses, the Spring Statement was a further blow.
“This is to be expected as costs have piled on businesses simultaneously. On the domestic side, tax rises, specifically the NICs increase, are consistently cited by businesses as a concern. Added to this, an emerging global tariff war could prove a major blow for both importers and exporters.
“The end result is a low growth outlook, weak investment among SMEs, and damage to global trade. As we see from the data, as more firms expect price rises, this could further fuel inflation and limit further interest rate cuts.”
Shevaun Haviland, Director General of the British Chambers of Commerce, said:
“The national insurance rise has been an impending concern for months. From this weekend, it will become a toxic reality for millions of businesses across the UK.
“Our survey shows tax continues to remain the top concern, with firms telling us they are planning to cut investment and raise prices, just to balance the books. In the past 24 hours, exporting firms have been dealt a further hammer blow by US tariffs. The cost pressures for business at home and abroad are now huge.
“Sustained economic growth will only come through businesses, not government. While there were some limited announcements in the Spring Statement, which we welcome, it is hard to get away from the bleak growth predictions.
“We urgently need the government to publish a wider tax roadmap, which includes national insurance, to give firms a direction of travel to lower cost pressures. Ministers must also focus on infrastructure projects and promoting exports as a springboard for business growth.
“The Employment Rights Bill also threatens to fuel further costs and complexity on businesses at a very delicate time. While Government has listened and made some sensible changes, the legislation as it stands risks unintended consequences which will limit economic growth.
“The Government needs businesses to invest and grow to kickstart the economy. But unless swift action is taken to ease cost pressures and support firms, growth will remain elusive.”
Notes to editor
The QES survey was conducted by the British Chambers of Commerce to nearly 5,000 respondents between 10thFebruary to 10th March.
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About the Norfolk Chambers of Commerce
The Norfolk Chambers is a not-for-profit independent business and is one of 53 accredited Chambers by the British Chambers of Commerce.
We are a business membership organisation, from start-up businesses, small and medium enterprises, and on to global brands, the Norfolk Chambers of Commerce embraces and represents the County’s business community.
We provide networking opportunities, share knowledge, offer business services, signpost to business opportunities and inspire innovative thinking to enable companies to do better business. Our voice is your voice, amplified through established connections, to ensure that politicians both local and in Westminster are focussed on creating and enhancing the conditions that are most conducive for economic growth in our region. The Chamber’s long track record of 126 years and our diverse membership, make us the pre-eminent network and one of the most respected voices of business in Norfolk.
