QES Q2 2026 - Business confidence takes dip in Humber as Q2 challenges persist

IN what many saw as a surprise move in light of the geo-political shocks of the Gulf and the Russia-Ukraine war, the Bank of England held interest rates at 3.75% in June.

That decision more or less coincided with the end of hostilities in the Middle East, but in the meantime, businesses in the Humber feared the worst about the rising costs of fuel and energy prices, on top of the double whammy of National Insurance and minimum wage increases, which had been a big hit for many businesses, particularly in the hospitality sector, although nationally, we didn’t see the rise in inflation many had predicted.

Businesses in the Humber who completed the survey said the both Home Sales and Home Orders had improved somewhat, but remained in negative territory. The Home Sales balance figure improved by 25 points to –8, while the Home Orders figure rose by 21 points to –25.

Export Sales and Orders also saw improvements this quarter, with the balance figure for Export Sales climbing by 21 points to –29, while the Export Orders figure climbed by just four points to a –29 balance figure.

Business confidence was still low however, with business reporting fears over Raw Material costs proving to be the biggest worries, with 34% more businesses noting their concerns.

Pay settlements and business finance were less of a concern this quarter.

Inflation and Competition were the biggest External Concerns flagged up by businesses, competition concerns up by 35% and inflationary fears rising by 24%. Tax increases were also a worry for 11% more firms surveyed this quarter.

Concerns over business rates and exchange rates were less of a worry this quarter.

Cashflow in the last three months had improved slightly with the balance figure climbing by 34% back into positive territory.

Firms were also more prepared to invest in new plant and machinery this quarter, with 11% more companies reporting plans to do so.

Turnover expectations also improved slightly, climbing by 29% to a balance figure of +8, while profit expectations were also more encouraging this quarter and also climbing back into positive territory with a balance figure of +8.

However, only 31 per cent of firms said that they were operating at full capacity this quarter.

Only 46% of firms said they were looking to recruit new staff with 83% citing difficulties.

The biggest challenge in this quarter was finding managerial staff, with 32% more firms highlighting difficulties.

Firms looking for unskilled, clerical or skilled manual workers found the search for staff a little easier this quarter.

Chamber Chief Executive, Dr Ian Kelly, commented: “A pause in hostilities in the Middle East and a pleasing hold in interest rates by the Bank of England at its recent Monetary Policy Committee meeting was a bit of good news which coincided with a slight improvement in the economy around the Humber.

However, many challenges still remain and business are facing an increasing cost burden which is straining their finances from several directions and it is clear that many are reluctant to invest in their futures, but are focusing on simply keeping their heads above water.”

Director General of the British Chambers of Commerce, Shevaun Haviland, said: “The continued fall in SME investment sentiment is further evidence of a longer-term pattern that no single shock explains.  

“Our data shows a risk-aversion cycle taking hold. Firms have not lost ambition, but years of compounding cost pressures and geopolitical shocks have produced defensive behaviour for the average SME.   

“Most firms are now experiencing policy as downside risk rather than opportunity - with the rise in employer NICs a prominent example, still being felt almost two years on. Reducing the cost and complexity of the administrative burden would give many firms the space to grow.  

“But more broadly, government policy needs to pass a 'growth delivery test'. Each proposal should start from the question of exactly how it will cause firms to increase investment, exports, hiring, or expansion. Until that test is being applied, our survey is likely to show the same pattern quarter after quarter. 

“The challenge for the new Prime Minister and his team is clear.”

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