Fewer than one in 10 businesses in the South West have confidence in the UK’s economic prospects, with a record 73% fearful over the impact of inflation, according to new survey.
At the same time the number of firms concerned about exchange rates has doubled, with a third of exporters suffering a fall-off in their overseas trade. 
The dire picture emerges from the latest quarterly survey carried out by Business West, the region’s largest business group and the organisation behind Bath Chamber of Commerce.
Many of the 400-plus firms taking part in the research expressed concern over soaring raw material costs, energy bills and wages at a time of near double-digit inflation and rising interest rates.
And there are fears things could get worse as the the survey was carried out ahead of the recent mini-Budget and its disastrous impact on the pound and international market confidence in the UK economy.
Confidence among firms on the outlook for the country’s economy declined dramatically with just 9% of respondents feeling confident in prospects for the coming year.
This was down from 13% in the previous quarter and a steep fall from the 32% recorded in the first quarter of 2021 at the height of the pandemic.
However, 46% expressed confidence about their own business prospects.
Overall, net UK sales and orders, which were both positive in previous quarter, tipped into negative territory – although only marginally so for UK sales.
The proportion reporting an increase in domestic sales dipped below 30% – a fall of five percentage points on the second quarter.
Exports remained in negative territory with a net balance of respondents reporting lower international sales and orders.
Shipping costs and the administrative burdens of international trade continued to weigh heavily on exporters margins.
Some 30% of exporters had also experienced a decrease in their international sales over the past three months.
The percentage of firms concerned about inflation hit a record 73% – beating last quarter’s historic high.
Half the businesses taking part in the survey had put up their prices in the past three months and a further 52% expect to have to increase them before the end of this year.
Energy and fuel led the inflationary pressure, with utilities reported as a worrying factor by 68% and transport costs by 52%.
However, the economic turmoil of recent months appears to have done little to ease recruitment problems and the very tight labour market meant employers continued to struggle to attract the talent they need.
Some 79% of the businesses that had tried to recruit during the quarter had difficulties finding suitable staff and 60% said they were under pressure to increase prices because of labour costs.
Business West director of policy Matt Griffith, pictured above, said there were scant sources of brightness on the horizon for firms as they approached a difficult winter characterised by higher costs across all categories of their spending and falling consumer demand.
“In a reflection of the volatile times faced by the UK and globally, our report sees several historic highs in our measures of local business concern, from inflation to future economic uncertainty,” he said.
“The energy price intervention will have addressed some of our local firms most pressing concerns, but our findings highlight the scale of the challenge in securing future business health and vitality over the coming year.”
Among the Bath business owners who completed the survey and spoke of their concerns was The Bath Pub company owner Joe Cussens.
He said: “The cost rises we’re seeing from all our suppliers are hard to reconcile, given the squeeze on consumers budgets.
“It’s going to be hard enough attracting people out over the next few months even without prices going up – raise them and it will inevitably put more people off from coming out.
“It’s not just your costs for your energy, as high as they are. But everything else has gone up. We used to pay about £1,000 for cooking oil a month, it’s now £4,000.”
