CUSTOMERS could be hit by higher prices as businesses in York and North Yorkshire grapple with ‘extreme’ challenges.
The warning comes as the latest results from the largest regional business survey show that inflationary pressures and recruitment difficulties are slowing the pace of the recovery.
The West & North Yorkshire Chambers of Commerce economic report also shows that the pace of domestic sales growth is being slowed by rising costs and access to skills and talent.
The survey was conducted before the Omicron surge, so its full impact may not be recorded in this data.
Laurence Beardmore, chair of the York & North Yorkshire Chamber of Commerce and director of York Emporium, said: “The crisis has put extreme pressure on the cash reserves of many regional businesses whose supply chains still face the twin challenges from Covid and Brexit, and now with intense labor shortages leading to spiraling wage increases as companies try to recruit and retain workers.
“Companies are reacting to these extreme inflationary pressures by seeking to pass on additional costs to customers in ever-increasing numbers, with our measure at its highest level in the 32-year history of this survey.”
Sir Roger Marsh, chairman of the Leeds City Region Enterprise Partnership and NP11, which brings together the 11 LEPs in the north of England, said: “The survey results indicate a continued recovery in demand, but with significant constraints from the supply side that are hampering growth.
“There are now also the consequences of Plan B which are currently unknown, but it is likely to have a severe impact on parts of the service sector.
“Labour shortages continue to be a major concern for businesses, as hiring staff proves difficult.
“The Combined Authority and LEP have recently implemented a range of new schemes to meet identified skills and employment needs in West Yorkshire, details can be found on the Leeds City Region LEP website. ”
Reports indicate that UK sales are showing continued signs of improvement, with businesses reporting increased activity.
Despite the supply difficulties, manufacturers also saw their sales increase in the last quarter, but international sales are still affected by the disruption of supply and rising costs.
Demand for labor is strong, but access to skills remains difficult, with 65% of service sector firms and 79% of manufacturers reporting difficulty filling vacancies in the last quarter.
Manufacturers are reporting an increase in capital investment in greater numbers over the past three months.
Projects delayed from 2020 are now advanced, but many companies are also reporting new investments to meet growing customer demand.
Investment in training remains largely unchanged; given the skills challenges, this could be due to a reluctance to spend as cash reserves have yet to return to pre-Covid levels.
There were 405 respondents who were business owners, senior managers, directors or with partner status, with 51 percent of the sample actively trading internationally.
Now in its 33rd year, the survey gives a regular update on local and regional economic trends and reveals company performance, including their order books, investment plans and the status of recruitment efforts.
For the full report visit www.wnychamber.co.uk/representation/qes/