West & North Yorkshire Chamber of Commerce says businesses in the county recorded less sales, investment and employment at the end of 2023.

Data from the Chamber’s Quarterly Economic Survey showed that after the good figures of the third quarter, there had been a general decline in confidence and performance.

Pay settlements joined inflation and interest rates as the key external pressures facing businesses in the region.

Domestic and international sales declined - in some sectors by a dramatic margin, with 38 per cent of firms in the manufacturing sector reporting falling activity.

Similarly, overseas sales for service sector firms declined at their sharpest rate since the onslaught of the pandemic.

Hiring intent also declined, but few firms expect to cut staff, with most businesses expecting to keep staff levels static, with 78 per cent of service sector firms and 67 per cent of manufacturers anticipating no change to their headcount in the coming months.

Despite the bleak picture reported during the fieldwork during the latest QES, Yorkshire businesses remain optimistic on profits with neither sector anticipating a loss during the start of 2024.

Service sector firms are confident on delivering profits in the short term.

Despite inflation falling by higher-than-expected levels during Q4 it, along with interest rates, is still posing huge problems for businesses and remains a constraint on growth.

The fieldwork was also carried out following the hugely disappointing news that the Government has cancelled HS2 to the north of England, something 33 per cent of business leaders in Yorkshire said was bad news for their enterprise.

Martin Hathaway, managing director of the Mid Yorkshire Chamber of Commerce, said: “While quarter four presented some challenges with inflation still squeezing many organisations across our region, it is extremely encouraging to see that investment for staff training in service sector firms increased by 32 per cent.

“Upskilling and training staff is crucial to see future growth, setting us up for a strong 2024 to get back on track and back to delivering the exceptional business successes that Yorkshire is known for.

“This year, we as a Chamber have also had a huge focus on skills, working with our partners at the West & North Yorkshire Chamber of Commerce, researching, planning and beginning to implement the Local Skills Improvement Plans (LSIPs) for West Yorkshire. This is a key project that we will continue to work closely with our education providers on throughout the new year to ensure we get things right for generations to come.”

Head of policy Mark Casci said: “Pay settlements are increasingly being cited by business leaders as a cause for concern as business leaders seek to appease and retain a workforce that is being squeezed by soaring costs at every turn.

“While the decline in sales and investment activity is naturally a serious cause for concern, the outlook on profitability gives me grounds to remain sanguine.

“I speak to hundreds of businesses every month and, while there are of course significant challenges to trading, I have yet to detect a hint of nihilism.“After such a turbulent few years, businesses have become accustomed to choppy waters and I have yet to hear an economist predicting a return to stability any time soon.”