British businesses plan to raise prices as economic crisis bites

British businesses 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 UK economy.

Only one in three businesses are confident their profits will increase in the coming year, while 39 per cent expect a decline, the British Chambers of Commerce's (BCC) quarterly survey found. Sixty-two per cent of companies said they planned to raise prices in the next three months, slightly below the record 65 per cent 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 raise interest rates, and 37 per cent of businesses said they were worried about the effect of the uprating trend.

Almost 80 per cent 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 before the announcements of the government's energy support package and calamitous mini-budget which precipitated market chaos and continues to cost the UK economy billions.

The pound tanked and mortgage rates were pushed to levels not seen in more than a decade. "The devaluation of the pound has also added a huge cost base for businesses reliant on imports," Mr 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 August 22 and September 16, mostly small and medium-sized enterprises.