Business conditions have continued to remain challenging in the UK despite some signs of improvement, an official survey has shown.
Energy prices and inflation of goods and services have remained the top two concerns for businesses, according to Business Insights and Conditions Survey (BICS) data released by the Office for National Statistics on Thursday (4).
Britain’s inflation slowed in March but stubbornly held above 10 per cent – more than five times its official target of two per cent – on soaring food prices in spite of a series of aggressive interest-rate hikes.
In March, the Consumer Prices Index went up by a stronger-than-expected 10.1 per cent from 10.4 per cent in February.
The Bank of England (BoE), which has ramped up interest rates 11 times in a row since late 2021 to 4.25 per cent, is expected to deliver a 25-basis point increase in the bank rate on May 11.
The BICS survey showed that seven in 10 (71 per cent) businesses reported some form of concern, looking ahead to May. But the figure was marginally down from 72 per cent for last month.
While 18 per cent of the businesses surveyed said energy prices were their top concerns while 16 per cent felt inflation of goods and services was their main worry.
About a third (31 per cent) of businesses with 10 or more employees experienced worker shortages in late April, which was up two percentage points from late March 2023.
Some 14 per cent of businesses reported that their employees’ hourly wages had risen in March, relative to a month earlier. However, this was 23 per cent for businesses with 10 or more employees.
But just nine per cent of businesses said they were directly or indirectly affected by industrial action in March, down three percentage points from February.
Meanwhile, a BoE survey of companies on Thursday showed expectations for selling prices refused to budge lower in April, but their predictions cooled for wage growth and inflation in the coming year.
The banking regulator is closely monitoring wage-setting and businesses’ profit margins as it attempts to bring down inflation to its target level.