British companies are the most downbeat about the outlook for their profits since late 2020.
According to figures from the British Chambers of Commerce’s (BCC) quarterly survey, this is due to widespread plans to raise prices adding to signs of gloom about the economy.
Only one in three businesses are confident their profits will increase in the coming year, while 39 percent expect a decline.
More than 62 percent of companies said they planned to raise prices in the next three months, just below the record 65 percent that said they would have to do so in the previous quarter.
Concerns that soaring inflation will become entrenched have spurred the Bank of England to hike interest rates. 37 percent of businesses said they were worried about the effect of rising interest rates and almost 80 per cent expect either no change or a decrease in investment spending.
BCC head of research David Bharier said that many firms were caught in the pincer movement of soaring inflation and rising interest rates.
The survey was conducted prior to the announcements of the government’s energy support package and controversial mini-budget. The mini-budget pushed up government bond yields – a benchmark for borrowing costs in the wider economy – and briefly pushed the pound to a record low against the US dollar.
“The devaluation of the pound has also added a huge cost base for businesses reliant on imports”, Bharier said.
Indicators trended downwards across the board. Businesses complained of shrinking cash flow, declining sales, and rocketing input prices.
