Chambers bosses call on Government to act to ease crippling cost pressures

The plea from Greater Birmingham Chambers of Commerce, which covers Cannock, Lichfield and Kidderminster, comes in a final quarterly business report of 2019 that revealed there were growing concerns around business rates and levels of corporation tax which have left a number of local businesses facing severe cost burdens.

While the report, sponsored by Birmingham City University, showed stability in domestic markets, it was clear that levels of worldwide trade were continuing to be affected by the US-Chinese trade war and the continued fallout from Britain’s withdrawal from the European Union.

The OECD released figures in late November which revealed that exports from the EU fell by 1.8 per cent and imports dropped by 0.4 per cent. The UK was also affected by this malaise with a 3.3 per cent fall in export levels in the third quarter of 2019. The added uncertainty created by the General Election and the fall in the value of sterling against the US dollar were listed as key factors behind this development.

Despite seeing a slight rise in the number of exporters reporting an increase in international demand (up from 29 per cent to 32 per cent in the current quarter) this was offset by a more pronounced upturn in the percentage of firms recording a drop in non- UK sales over the last three months (an increase of six per cent in the final quarter).

GBCC chief executive Paul Faulkner said: "In our last survey of the year, we witnessed stability in domestic demand, a minor fall in international business and recruitment levels remained broadly similar when compared to the third quarter.

"But of more concern was an increase in the price pressures that local firms are facing and a nominal fall in capex investment as the uncertainty caused by Brexit continues to impair business confidence.

"Beyond the tortuous process of Britain’s attempts to extricate itself from the European Union, there were growing concerns around business rates and levels of corporation tax – factors which came into sharper focus during the General Election given the largely perfunctory promises made by the major political parties on reforming these areas.

"In the Queen’s Speech before Christmas, the Government also made promises to carry out a review of the business rates system and reaffirmed its election pledge to reduce the burden that SMEs are currently facing.

“However, this approach does little to help the anchor institutions on the high-street that are facing severe cost pressures as a result of spiralling business rates. Instead of carrying out yet another review of this outmoded system, the Government would be wise to heed the recommendations made by the Treasury Select Committee regarding business rates in a bid to enhance levels of competitiveness and reduce bureaucracy.

"Nevertheless, we can only hope that the large majority secured by the Government will now act as a springboard for stability – a vital factor that businesses crave in order to make long term decisions over hiring staff and investing in technology."

Professor Julian Beer, deputy vice-chancellor of the BCU, said: "The past quarter has certainly been eventful in a political sense. October saw another Brexit extension granted, whilst November and December have been marked by the first winter election since the 1920s.

"For many businesses in Birmingham, growth has been steady this quarter, in marked contrast to the political dramas going on at national level.

“Although export demand growth is lower than last year, there remains much to be optimistic about in the festive season. Business hiring intentions remain robust in Birmingham and we enter 2020 with a more highly educated workforce than ever before."