UK businesses most downbeat about profits since Q4 2020 - BCC
By Humza Jilani
LONDON, Oct 6 (Reuters) - British companies are the most downbeat about the outlook for their profits since the depths of the COVID-19 pandemic in late 2020 despite widespread plans to raise prices, a major survey showed on Thursday, adding to signs of gloom about the economy.
Only one in three businesses are confident their profits will increase in the coming year, while 39% expect a decline, according to the British Chambers of Commerce's (BCC) quarterly survey, the largest of its kind.
Some 62% of companies said they planned to raise prices in the next three months, just below the record 65% that said they would have to do so in the previous quarter.
Concerns that soaring inflation will become entrenched have spurred the Bank of England to hike interest rates. 37% of businesses said they were worried about the effect of rising interest rates and almost 80% expect either no change or a decrease in investment spending.
"Many firms are caught in the pincer movement of soaring inflation and rising interest rates," said David Bharier, head of research at the BCC.
The survey was conducted prior to the announcements of the government's energy support package and controversial mini-budget. The mini-budget pushed up government bond yields - a benchmark for borrowing costs in the wider economy - and briefly pushed the pound to a record low against the U.S. dollar.
"The devaluation of the pound has also added a huge cost base for businesses reliant on imports," Bharier said.
Indicators trended downwards across the board. Businesses complained of shrinking cash flow, declining sales, and rocketing input prices.
Amid economic and financial uncertainty throughout the economy, businesses are eager to see a long-term plan from the government to boost confidence, the BCC said.
The BCC surveyed 5,200 firms between Aug. 22 and Sept. 16, mostly small and medium-sized enterprises.
Reporting by Humza Jilani; editing by David Milliken
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.