QES Q4 2025 - Quarter 4 results show business confidence is still struggling to recover
THE last quarter of 2025 did little to restore business confidence in the Humber, with tax increases being the biggest concern for firms.
Hot on the heels of tax fears, companies were also fretting about pay settlements with an increase in the minimum wage looming in April and despite the Budget not being as bad as many had feared, there were few bright spots in the last quarter’s results.
The only positive sector was Home Sales, possibly with early Christmas shoppers getting themselves organised ahead of the festive season. That sector saw its balance figure improve by five points, yet remained in negative territory.
Home sales fell a further three points, down to –35.
Exports were also in the doldrums, with Export Sales dropping nine points to a balance figure of –42, and Export Orders doing even worse, down a further 24 points to –58.
A mere 26 per cent of firms reported that they were working at full capacity, with profit expectations taking a tumble to –35 points, a further 17 point drop on last quarter.
Cashflow in the last three months was also down by a further 16 points on the last quarter, to –42.
Turnover expectations for the next three months were marginally more optimistic, rising by a single point to –10, however, profit expectations fell by another 17 points to a balance figure of –35.
More firms said they were expecting to have to increase their prices in the coming months, with the balance figure increasing by a further 14 points to 33. The key driver was pay settlements, with a slight drop in expected raw material costs and other overheads, while access to finance stayed the same this quarter at 17 points.
Employment in the preceding three months fell by 21 points, taking it back into negative territory, after breaking even in the previous quarter.
Expected Employment for the next 12 months also took a hit, dropping by 12 points to increase its negative balance figure to –19.
In Quarter 4, 58% of firms said they had tried to recruit staff. Permanent part time jobs were the most widely available, with an increase of 10 points, while full time roles dropped by 10 points to -57 and temporary jobs dropped from 25 last quarter to 24 this quarter.
Eighty per cent of firms said they had difficulties in recruiting the right staff this quarter, with clerical (+2) and unskilled/semi-skilled roles increasing by 9 points.
Skilled manual jobs were down 14% to –56 while management positions were also down notably, dropping by 17 points on the last quarter’s figure.
Investment in training was down nine points this quarter to a balance figure of –35, and fewer firms said they were planning to invest in plant and machinery, with the balance figure dropping to –46.
Exchange rates were less of a concern this quarter, however, all other External Concerns were up.
Perhaps with a cut in interest rates by the Bank of England in December to 3.75%, the first quarter of 2026 will herald a brighter set of results.
Chamber Chief Executive, Dr Ian Kelly, commented: “Our survey shows another tough quarter for businesses as economic conditions continue to challenge the best of them.
“As we start 2026, we can only hope that December’s cut in interest rates and renewed optimism of a New Year and little less uncertainty around Government policy will restore a degree of business confidence in the Humber.
“If the Government can demonstrate that its plans are starting to work and there is to be a period of stability, then this year might be a better one for business than 2025 turned out to be.”
Director General of the British Chambers of Commerce, Shevaun Haviland, said: “Our data shows more clouds have gathered over business confidence, and the outlook for SMEs in 2026 is unsettled.
“Firms tell us they are worried about tax, struggling to invest and fear they’ll have to put their prices up in the months ahead. Firms’ confidence in their turnover growth has been stuck stubbornly below 50% for the last 12 months.
“After a long period of uncertainty and speculation heading into the Budget, concerns about major new tax rises eased somewhat in the aftermath. However, a Budget fundamentally light on growth measures did little to boost business confidence, and sentiment overall has worsened since the previous quarter.
“It is now critical that 2026 is a year of delivery. The Government needs to turn last year’s strategies into action; boost investment, significantly expand trade, and ease the myriad burdens facing businesses.
“Only then will the economic outlook shift from its current low-growth trajectory.”
