QES Q3 2025 - Business braces for next Budget as stubborn inflation and tax bite
IT was quite a mixed picture in the Humber in Quarter 3 as far as the local economy goes, according to the most recent survey of businesses.
However the underlying difficulties remain with continuing uncertainty, falling turnover and rising prices.
This is set against a national picture of stubborn inflation which remained at 3.8% in August and the interest rate being held at 4.0% by the Bank of England.
Home Sales and Orders were both down slightly this quarter, with Home Orders dropping by just one point but staying firmly in negative territory at –1, and Home Orders dropping a further seven points into the red at –32.
Export Sales and Orders fared slightly better, but also remained in negative territory, with Export Sales improving by four points to –33 and Export Orders rising by the same figure to –34.
Firms reported that Cashflow in the last three months had improved slightly rising by seven points to a balance figure of –26, and more firms were investing in plant and machinery, with that balance improving by 30 points to –37.
Prices were expected to rise in the next three months as raw material costs are on the up, and although turnover expectations were down by 11 points, profit expectations improved slight by seven points to –18.
However turnover expectations for the next three months were down 11 points to –11.
Fewer firms had tried to recruit staff this quarter, with the figure dropping from 50 to 44%, but for those who had attempted to recruit new staff the key difficulties were finding skilled manual workers this quarter with 70% of respondents highlighting that issue, while clerical and unskilled or semi-skilled employees were also more difficult to source.
In contrast, management roles were easier to fill this quarter with 25% fewer firms reporting difficulties.
Of those firms who had tried to recruit staff, slightly fewer of them reported difficulties.
The biggest drop was in full time positions which were down 13%, while part time and temporary jobs both rose, and both by 5 percentage points.
There was only a very slight increase in the number of firms trying to recruit staff for permanent positions.
External concerns were still a key feature in this quarter’s results, with inflation becoming an increasing concern, highlighted by 37% more businesses this quarter.
Business rates were also cited as a concern, as were exchange rates and interest rates, all up on the previous quarter.
Price pressures this quarter included raw material costs, with three per cent more firms saying they were concerned about rising prices of those, and the cost of finance was another issue highlighted, while access to finance was also more challenging.
Pressures over pay settlements dropped sharply this quarter and 52% fewer firms citing this as a concern.
Only26 per cent of firms said they were working at full capacity this quarter.
Chamber Chief Executive, Dr Ian Kelly, commented: “Our survey results for the third quarter of 2025 show that businesses in the Humber region are still dealing with the fall-out of National Insurance tax hikes and the rise in the minimum wage rate.
“Now, however, there is another concern looming in the shape of the Autumn Budget in November. It is clear from our survey results that businesses are bracing themselves for more bad news and battening down the hatches.
“Home Sales and Orders are both down this quarter, as are Turnover and Profit Expectations and fewer firms are trying to recruit new staff.
“At the same time were are seeing raw material costs going up and the inevitable increases in prices, as concerns continue around interest rates and inflation.
“Business now needs a period of stability in the Humber, and not another raid from the Chancellor!”
The Director General of the British Chambers of Commerce, Shevaun Haviland, said: “Ahead of the Chancellor’s statement next month, our survey shows many firms remain bruised and are not ready for another Budget battering. The research reveals no clear improvements to key indicators we track. For 12 months, SMEs have told us the same story: rising costs, weak investment, and little sense of relief on the horizon.
“The Employer NICs increase has been the most widely cited source of pressure, hitting investment and pushing up prices. The proportion of businesses expecting to raise prices remains worryingly high, driven primarily by labour costs. Inflation now sits alongside taxation as a top concern. The global shift towards protectionism and tariffs has also been a major compounding factor.
“Persistent weak sentiment this quarter may suggest that many firms have already priced in a tough Budget. But further surprise measures that hit business, like those seen in 2024, could drive confidence even lower.
“Our message to the Chancellor ahead of the Budget is clear – no further tax rises on business. SMEs are calling for urgent action to tackle skills shortages, a bold push to boost exports, and more investment in infrastructure. Without that, confidence could deteriorate further, putting economic growth at risk”.
