Suffolk businesses face "most challenging environment since COVID"

Why it matters: The vast majority of economic measures are now in negative territory, with more companies reporting declines than improvements, signalling significant challenges for the local economy.

By the numbers:

• Nearly 80% of Suffolk respondents expressed concerns about business taxation levels

• Inflation fears jumped to 53% of companies, up 12 percentage points from last quarter

• Just a fifth of Suffolk manufacturers and a third of service sector businesses are operating at full capacity

The details: The Quarterly Economic Survey for the first three months of 2025 shows steep declines across most sectors, with manufacturers reporting their worst figures since Q2 2020:

• Cashflow down 20 percentage points to -35%

• Capital investment down 23 percentage points to -29%

• Investment in training down 10 percentage points to -16%

• Confidence in turnover improving down 11 percentage points to -5%

Service sector hit harder: Declines were even greater for the county's service companies with significant falls in:

• Domestic sales (down 26 percentage points to -12%)

• Domestic orders (down 25 percentage points to -25%)

• Investment in training (down 29 percentage points to -37%, the worst since Q2 2020)

What they're saying: "It's really tough out there and the agenda for growth seems very challenging. Another minimum wage increase is unwelcome when coupled with Employer NI increases. It's only going to get more challenging," said a manufacturer in West Suffolk.

"The worst business conditions in our 25-year history," reported a creative services company in East Suffolk.

Root causes: Business leaders identified several factors behind the downturn:

• Increases to tax liabilities introduced by the Government

• Removal of some business rates reliefs

• Lowering the threshold for Employer National Insurance Contributions

• Above inflation increases to the National Living Wage

• Uncertainty over the wider global trading situation including US tariffs

Job market impact: The economic tightening is affecting employment, with manufacturers reporting a 22 percentage point fall in recruitment attempts over the last three months, while service companies saw a seven percentage point decline.

What's next: Paul Simon, Suffolk Chamber's head of public affairs, called for two key measures:

1. No further tax hikes on businesses during this Parliament with progressive reduction in business taxes.

2. Infrastructure investment in the forthcoming Spending Review, including improvements to the Ely and Haughley rail junctions, and enhancement of the county's strategic road, 5G and water supply infrastructure.

The bottom line: Suffolk businesses are struggling under multiple economic pressures, with the Chamber of Commerce warning this is the most challenging business environment since the COVID pandemic.