Businesses are in a state of “paralysis” and putting off decisions on jobs or investment as they worry about tax and rising costs, a new survey has shown.
Company leaders in Liverpool City Region polled as part of the latest British Chambers of Commerce Quarterly Economic Survey (QES) said economic uncertainty and the impact of this year’s changes to national insurance contributions had left them fearful for the future. One business leader said: “We are having lots of sleepless nights”.
Of those polled for the QES across Liverpool, Knowsley and Halton, 62% of local firms said taxation was more worrying to them now than it was three months ago, while 54% of respondents said inflation was a key worry.
Some 45% of those polled said they expected to have to raise their prices in the near future, with less than 2% expecting prices to fall. Some 90% of those polled said increasing employment costs had put them under pressures, while other cost pressures reported included utilities (59% of those polled) and raw materials (41%)
Some 81% of those polled said they expected turnover to improve or stay the same, but 31% say they expect profitability to drop over the period. More than half (52%) believed their business was operating at below full capacity and 46% said cashflow had fallen, hitting investment plans for tech, plant and machinery.
Some 46% of those polled said export orders and advance agreements had declined, while 42% said export orders had fallen. However less than a quarter said Ƶ sales and orders had dropped while a third said domestic sales had risen.
The study showed businesses were hesitating before making any long-term decisions. Some 60% did not expect to change the size of their workforce in the near future, with just 13% expecting headcount to fall despite increasing cost pressures.
Some two-thirds of firms polled had tried to recruit over the past three months, but 70% found it hard to recruit.
Some business owners gave detailed responses to the Chamber’s survey. One said: “We are having lots of sleepless nights. Since the tax and NI changes kicked in in April 2025, the trading environment has become increasingly difficult.
“Pre-April, with the work we had planned with clients for the rest of the year, we had a projected 60-75% increase in turnover by our year-end in October.
“However, a combination of increased costs and overheads, and clients cutting non-essential aspects of planned projects due to their own increased costs and overheads, means we will end this year with less turnover than last and in deficit.
“It is only through very savvy decisions and budgeting that the business is still operating.”
Another business leader said they were worried about a slowdown in public spending. They said: “The outlook remains consistent, but we are still trading on Conservative government-funded work in the public sector. Currently Labour government policy suggests that once this runs out, no real opportunities are expected to come to fruition under their present strategy, hence we see increasing our private sector exposure critical to short-medium term survival – however this is not a great market in the north.”
Paul Cherpeau, chief executive of Liverpool Chamber, said: “This survey underlines the frustrating reality that many businesses find themselves in a state of paralysis, unable or unwilling to move ahead with growth or investment decisions, understandably concerned about the impact of Ƶ government policy around business taxation and the National Minimum Wage, as well as global factors such as tariffs and conflict.
“The impact of this trading environment can be seen bleeding through into the city region and Ƶ economy, with stagnant GDP growth and lower productivity, while the looming threat of a Budget in November only serves to heighten tensions.
“We urge the government to reassure businesses by bringing forward a sustainable and deliverable long-term plan for economic growth that doesn't involve any further tax raids on business owners and employers.”
Some respondents did give more positive feedback, though remained cautious. One said: “A very slow start to the year has suddenly turned into a very busy Autumn, with a lot of new opportunities coming along at the same time. Many of these have been in the development pipeline for several years, so the real test will be whether the growth is sustained next year and beyond.”
