Chris Hobson is director of policy and external affairs at East Midlands Chamber. Here he gives his thoughts on the current economic situation for East Midlands business from the war in Ukraine:
"First and foremost, the terrible events in Ukraine represent a humanitarian crisis not seen in Europe for 80 years and one that, as with Covid-19, nations are coming together to support on.
Businesses and businesspeople are already doing their bit where they can to offer resources and relief. This effort will rightly continue, with East Midlands Chamber also offering its full support of these efforts.
However, while the economic impact is obviously secondary in this, it is real and one that, right now, we just don’t know how it will play out in the long term. The supply of oil and gas, zinc, copper, steel, nickel, wheat and many other commodities are all being disrupted or, in some cases, halted.
The impact of this in the more immediate term is clear. In the Q1 2022 edition of our Quarterly Economic Survey, which gauges the health of the region’s economy, a net 66 per cent of East Midlands businesses said they expect their prices will have to rise in the next three months, with raw materials and energy cost increases causing the most pressure.
This marked a 4 per cent increase on the previous quarter and the ramifications are now being seen in cashflow, with 30 per cent of firms reporting this fell compared to it improving for only 27 per cent.
It is the first time this economic indicator – so important because cash is what ultimately powers firms’ ability to invest in people, machinery and equipment, which is what enables productivity improvements – has fallen into negative territory for more than a year.
Beyond these cost increases, there will be many other direct short-term impacts – for example, car manufacturers pausing operations due to raw material shortages – but also the potential for as yet unknown medium and longer-term impacts.
These new “unknowns” have undoubtedly impacted confidence and slowed the growth we would have hoped to see in our Q1 survey.
They’ve also dampened investment intentions for some at a time when we need businesses to be investing to grow.
The impact throughout the remainder of 2022 is not yet clear and much will depend on what happens next in Ukraine.
There is, however, one thing we do know.
Businesses in the East Midlands will respond to this with tenacity, drive and a desire to do the right thing – both with regards to offering support where it is needed, but also looking at their own growth prospects, and the positive impacts these have on the local economy and the communities in which they are based."
ChamberCustoms, a customs agent service overseen by the British Chambers of Commerce and delivered locally by East Midlands Chamber, is aiding relief efforts by offering free one-off export declarations for goods being transported from the Ƶ to Ukraine and surrounding countries for humanitarian efforts. For more information, visit www.chambercustoms.co.uk/ukraine.
