BUSINESSES in York and North Yorkshire are facing a perfect storm as they contend with rising inflation and recruitment challenges.

Significant concerns have been raised in the latest economic report from Chambers of Commerce in West & North Yorkshire about rising inflation from raw materials and energy.

As companies plan for growth, the staff shortage and recruitment difficulties are also adding further costs.

However, domestic demand remains strong with early signs that international trade activities may start to improve as travel restrictions begin to lift.

Laurence Beardmore, president of York & North Yorkshire Chamber of Commerce, said: “This quarter we report on the perfect storm which our regional business community is facing.

“This is almost entirely driven by supply side challenges as raw materials, shipping disruption, rising energy costs, haulage costs and labour shortages are all contributing to increasing the costs of doing business. This is further impacted by global Covid spikes and the tragic war in Ukraine, all of which follows the most challenging two years for business.”

“Short term, inflationary pressures will have a material impact on company cash flows and likely hinder their recovery. Longer term, business confidence remains largely unchanged from the last quarter as companies try and see beyond the next 6-12 months.”

Sir Roger Marsh, chair of the Leeds City Region Enterprise Partnership and NP11, said: “Alongside labour shortages, businesses are facing rising inflationary pressures last seen in the early 1990s. Energy and utility prices are reported as a major problem facing businesses, particularly those in energy-intensive manufacturing.

“Many commodity prices have recently increased due to the war in Ukraine, particularly those found in Ukraine and Russia, such as wheat and nickel. Delays at ports in China due to Covid lockdowns is adding to these economic headwinds, with data suggesting that congestion at two Chinese ports is at its highest level in five months”

The Chamber’s full QES report can be found online https://www.wnychamber.co.uk/representation/qes/

Now in its 33rd year, the quarterly economic survey is the largest and longest running regional business survey.

Q4 survey results

Manufacturing

• Domestic sales 35% down slightly from 37% in Q4 2021

• Export sales 14% down from 29%

• Export orders 33% up from 16%

• Capital investment 32% down slightly from 33%

• Training investment 21% up from 20%

• Business confidence 49% up from 46%

Service sector

• Domestic sales 46% up from 37%

• Export sales 21% down slightly from 22%

• Capital investment 21% up from 18%

• Training investment 21% down slightly from 22%

• Business confidence 52% up from 49%