The BCC’s Quarterly Economic Survey (QES) – the UK’s largest independent survey of business sentiment and a leading indicator of UK GDP growth – has shown the recovery stalled in the fourth quarter, with firms facing unprecedented inflationary pressures.

The survey of almost 5,500 firms showed that some indicators also revealed a continued stagnation in the proportion of firms reporting improved cashflow and increased investment. Inflation is the top issue for firms, while a rise in the interest rate was also a cause for concern for many.

 

Business activity

45% of respondents overall reported increased domestic sales in Q4, down from 47% in Q3. 16% reported a decrease, unchanged from Q3.

In the services sector, the balance of firms reporting increased domestic sales dropped to +26% in Q4, from +31% in Q3.

In the manufacturing sector, the balance of firms reporting increased domestic sales was +22% in Q4down from +28 in Q3.

Prior to the surge in Omicron infections, hotels and catering had been most likely to report increased domestic sales (55%). This represented the beginning of a potential recovery as the sector was also the most likely to report decreased sales throughout the rest of the pandemic. 94% reported decreased sales and cash flow at the start of the pandemic in Q2 2020. Worryinglya similar decline is now possible in the face of the Omicron variant and the implementation of Plan B which led to new restrictions for some.

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