CUSTOMERS could be hit by higher prices as businesses in York and North Yorkshire grapple with 'extreme' challenges.

The warning comes as the latest findings of the largest regional business survey show that inflationary pressures and recruitment difficulties are slowing the pace of recovery.

The economic report from chambers of commerce in West & North Yorkshire also shows the pace of domestic sales growth is being slowed by increasing 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, president of York & North Yorkshire Chamber of Commerce and director at York Emporium, said: “The crisis has placed extreme pressures on the cash reserves of many regional firms with supply chains still facing the twin challenges of Covid and Brexit, and now with intense labour shortages leading to spiralling pay increases as companies try to recruit and retain workers.

“Companies are responding to these extreme inflationary pressures by looking to pass additional costs on to customers in ever greater numbers, with our measure at its highest level in this survey’s 32-year history."

Sir Roger Marsh, chair of the Leeds City Region Enterprise Partnership and NP11, which brings together the 11 LEPs across the North of England, said: “The results of the survey point to a continued recovery in demand but with significant supply side constraints which are hampering growth.

"There are now also the consequences of Plan B that are currently unknown, but it is likely to have a severe impact on parts of the service sector

“Labour shortages continue to be a key concern for businesses as hiring staff is proving challenging.

"The Combined Authority and LEP have recently implemented a series of new programmes to respond to identified skills and employment needs across West Yorkshire, details can be found on the Leeds City Region LEP website.”

The reports says that UK sales show continued signs of improvement with companies reporting increased activity.

Despite the supply challenges, manufacturers also saw sales rise over the last quarter, however, international sales still remain impacted by the supply disruption and rising costs.

Demand for labour is strong but access to skills remains challenging with 65 per cent of service sector firms and 79 per cent of manufacturers reporting difficulties filling vacancies in the last quarter.

Manufacturers report increasing capital investment in greater numbers over the last three months.

Delayed projects from 2020 are now being brought forward but many firms also point to new investment to meet rising demand from customers.

Investment in training remains largely unchanged; given the skills challenges faced, this could be down to a reluctance to spend whilst cash reserves are yet to return to pre-Covid levels.

There were 405 respondents who were business owners, senior managers, directors or with partner status, with 51 per cent of the sample actively trading internationally.

Now in its 33rd year, the survey gives a regular update of local and regional economic trends and reveals how businesses are performing, including their order books, investment plans and how recruitment efforts are faring.

For the full report visit