Resilient businesses in the East of England remain positive about economic outlook but brace for further tax increases
Data from Grant Thornton UK's latest Business Outlook Tracker shows that business leaders in the East of England have confidence in the strength of the economy and in the growth expectations for their own business despite high operating and people costs and the expectation of additional taxes later this year.
Key indicators from the survey of mid-sized businesses in the East show that business leaders are optimistic about the UK economy, with 84% of respondents expressing a positive outlook.
Though UK labour statistics in June reported falling vacancies and increased unemployment, recruitment investment intentions remain strong, with 92% of businesses expecting to either increase or maintain investment in recruitment over the next six months.
Mid-market businesses regard high operating and staffing costs as a significant challenge, potentially exacerbated by the increases in employer National Insurance and National Minimum Wage contributions introduced in April.
Among respondents in the East of England, 90% said these changes had caused them to reduce or freeze hiring, and 92% said they’d had to cut jobs. The majority (96%) also expect further tax increases before the end of the year.
Despite these pressures, businesses feel supported by government strategy:
- 78% of respondents agree government policy promotes economic stability.
- 86% agree government policy supports business growth.
- 84% agree that the Industrial Strategy will support the growth of their business.
- 88% of the mid-market businesses expect revenue growth for the next six months to remain steady.
- 57% expect profits to increase in the next six months.
Charlotte Anderson, Practice Lead for Grant Thornton UK in Cambridge, Milton Keynes, and Chelmsford, said: "Businesses in the East of England have learnt to treat uncertainty as the new normal. From Cambridge’s world-leading life sciences and technology industries to Milton Keynes’s expanding digital economy and logistics sectors, companies across the region are showing remarkable resilience despite ongoing challenges from trade disruptions to policy changes at home.
"That's not to say it's been easy. Businesses in the East continue to grapple with rising costs, particularly following the National Insurance and National Minimum Wage increases in April. Whilst there's cautious optimism about government direction, many expect further tax pressures ahead.
"What's encouraging is that businesses in the East of England are actively preparing for growth, with recruitment intentions remaining strong. Companies are demonstrating real adaptability - adjusting pay structures, carefully managing prices, and making strategic investment decisions to protect their margins.”