8 out of 10 Midlands businesses have experienced increased costs as a result of the Iran war, according to a survey from four chambers of commerce in the region. Manufacturers have been particularly exposed to rising energy, transport, insurance and raw material costs.
East Midlands Chamber, Greater Birmingham Chambers of Commerce, Coventry & Warwickshire Chamber of Commerce and Black Country Chamber of Commerce surveyed 698 businesses.
The four chambers of commerce are calling on Government to recognise the regional impact of continuing geopolitical disruption and provide businesses with greater certainty over energy, trade and supply chain policy.
Summary of findings from the survey:
- 8 of 10 respondents (80%) experienced an increase in business costs due to the Iran conflict and associated disruption to international trade routes
- Almost all manufacturers surveyed (95%) reported higher costs, compared to 75% of service-sector businesses
- 12% of exporters, of the 187 that responded, reported paused activity or having withdrawn from specific overseas markets
- More than a quarter of respondents (26%) said the situation had influenced investment or capital spending
- Half of firms (50%) identified energy cost support or improved stability as the leading priority to help manage continued geopolitical disruption
- Clearer government contingency planning was the second most common request, identified by 47% of manufacturers and 36% of service businesses
East Midlands Chamber Chief Executive Scott Knowles said: “High costs and uncertainty are two things that challenge business growth, affect confidence and ultimately investment, yet both jump out of the page as red flags in these survey findings – that should be a concern to policymakers.
“The results of this research lay bare the extent of damage this long running conflict, and others, has had on firms – holding back investment, holding back growth.
“For 8 out of 10 firms surveyed to have reported higher costs as a result of the Middle East conflict – at a time when we know the cost of doing business was already sky high – should concern policymakers.
“For investment intention to have stalled for many firms; for price pressure to have increased – these should be concerns for policymakers too and prompt action.
“The case for support is clear – the respondents in this survey are calling for greater help with energy costs and better contingency planning. I would urge policymakers to prioritise delivering in the areas firms have highlighted so growth is not hindered.”
Greater Birmingham Chambers of Commerce Deputy Chief Executive Raj Kandola said: “Businesses across the Midlands continue to demonstrate resilience in the face of significant global uncertainty, but our research shows that this resilience is being tested.
“Rising operating costs, supply chain pressures and uncertainty around future investment are all consequences of international events that are increasingly being felt at a local level.
“The findings reinforce the importance of creating a stable environment in which businesses can invest with confidence.
“The Prime Minister has rightly recognised the importance of reducing energy costs for consumers, but we need to see a similar focus on improving energy affordability and stability for businesses.
“Alongside clearer government contingency planning, measures that help firms manage energy costs will be vital in helping businesses withstand future shocks, protect jobs and continue driving economic growth across the region.”
Black Country Chamber Chief Executive Sarah Moorhouse said: “This important research makes it clear just how deeply the conflict in the Middle East is being felt by Black Country firms and those across the wider Midlands.
“The fact that 80 per cent of businesses are seeing increased costs – including 64 per cent of manufacturers – just underlines the scale of the challenge the ongoing conflict is posing.
“The disruption to trade routes and impact on investment are being felt on factory floors and in workplaces across our region.
“There is a clear message to the new government that it must do more to plan ahead for such crises and develop an energy strategy which delivers the stability our businesses need to plan ahead with real confidence.
“It is critical that the voice of business is heard and we will continue to bang the drum for support for our members for as long as the crisis continues.”
Coventry and Warwickshire Chamber of Commerce Chief Executive Corin Crane said: “The Iran conflict has caused a series of direct and indirect impacts on businesses across the region.
“At a time when firms in both the manufacturing and services sectors were hoping for a stable footing from which to grow, the conflict has led to rising fuel prices which has a wider impact on inflation generally and on the direction of interest rates.
“All of that has a knock-on effect when it comes to confidence too.”
