East Midlands Chamber has cautiously welcomed GDP growth of 0.5% in February but warned of ‘fragile confidence’ among businesses in the region, with cost hikes like higher employer National Insurance contributions hitting firms from this month.
The latest estimated figures from the Office for National Statistics are higher than were expected by economists.
Director of Policy and Insight Richard Blackmore said: “Businesses need the economy to bounce back so there’s some comfort that can be taken from seeing growth in GDP, but firms are going through a tough time, having to fund additional costs like greater National Insurance contributions and a higher National Living Wage. In normal operating conditions, 0.5% economic growth would be a boost to confidence, but with these cost hikes hitting businesses, these aren’t normal times and we can’t underestimate how challenging things are.
“Corporate taxation is the top concern of businesses in the East Midlands right now, evidenced in our Quarterly Economic Survey and data we collected across nearly all measures painted a picture of fragile confidence from the region’s businesses. Half the respondents said they expect to have to raise prices, while four out of ten anticipated profitability to worsen over the next 12 months – a figure that’s doubled since we measured it in the Autumn, which really shows how much confidence has been dented.
“The impact of the additional costs faced by firms will become clearer over the coming months, while the turbulent US tariffs situation has not gone away and could affect growth. It’s essential that political leaders pull out all the stops right now to fully support businesses. Securing a favourable outcome from the US tariffs talks is critical, and all eyes will be on the government’s comprehensive spending review to ensure the needs of businesses are prioritised.”
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