“With a backdrop of weak business and investment confidence, sluggish Q3 growth of just 0.1% is unsurprising. 

“But the data suggests the cyber-attack on JLR hit manufacturing badly and made a mediocre performance worse. The overall 0.5% contraction in production counteracted growth of 0.2% in services and 0.1% in construction. 

“The lack of strong, consistent growth means this month’s Budget is a make-or-break moment for business – it must deliver for firms across the UK. Our latest survey of over 4,600 businesses shows a quarter have scaled back their investment plans, and a fifth are expecting their turnover to worsen over the next year.  

“That’s why we are clear, there must be no more taxes on business in November’s Budget. The Chancellor must also use her statement to tackle the skills crisis, help firms export and turbocharge infrastructure projects.  

“She faces difficult choices, but hitting businesses in the pocket again would be the wrong move. Recent speculation about a new cap on pension salary sacrifice schemes is worrying, as it would pile more costs on employers and limit investment. 

“The economy will continue to struggle unless business costs are cut and firms are given the right tools to invest, recruit and trade.”

More information on the GDP data for Q3 can be found here.

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In the foreword to a new BCC digital report, Baroness Martha Lane Fox raises concerns that businesses will continue to face barriers, if the country’s infrastructure and connectivity are not urgently improved. The crossbench peer tells ministers “you can’t build a new house on shaky ground.”  

The report examines whether the UK’s digital connectivity is supporting business growth, and what more needs to be done to harness new technology.  

Among the report recommendations, the BCC is calling for ministers to:   

• Provide a business specific assessment on threats to broadband, mobile connectivity and data centres in the UK – outlining how outages will be minimised.  

• Confirm long-term funding in the Budget to ensure full gigabit coverage for the UK by the government’s updated target of 2032.  

• Take urgent steps to address the persistent geographical disparities in gigabit broadband rollout.  

• Provide an up-to-date assessment on mobile connectivity and outline ways to provide consistent reliable coverage across the UK.  

In the report, Baroness Lane Fox calls out “buffering connections” for businesses, as a “brake on growth”. The BCC President says Government “must be laser-focused” to unlock the economic potential of digital technology “so every community, every business and every citizen can benefit.” 

The report highlights the continuing challenges facing businesses in rural areas. BCC research from 2023, found that only 56% of SMEs agreed that their area had reliable broadband, compared with 82% in urban areas.  

The BCC is calling on the Government to ensure that both broadband and mobile connectivity programmes are funded properly, and delivery targets are met. The organisation is also looking for reassurance that the growing number of data centres in the UK are built in a sustainable and resilient way, to support business growth.  

Baroness Martha Lane Fox, President of the British Chambers of Commerce said:  

“The digital revolution is reshaping the UK economy and presenting huge opportunities to businesses of all shapes and sizes.  

“But without reliable connectivity in every part of the country, economic growth will be held back. Businesses need a digital infrastructure they can rely on, now and in the future. Firms will struggle to fully harness the opportunities of AI if their broadband is patchy. We need to get the basics right.  

“The Budget later this month is an opportunity for the Chancellor to confirm long-term funding arrangements for gigabit rollout.  

“Connectivity is the foundation of a thriving digital economy – it’s time to finish the job.” 

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“There is little comfort in this data for businesses or the government. Employers are being squeezed by sky-high employment costs, and we are beginning to see the consequences.

“The strong rise in unemployment is a worrying sign, as vacancies remain virtually static on the quarter.  But while the rate of wage growth with bonuses has slowed again, it is still well above inflation.

“This feeds into higher prices, and we expect the Bank of England will be paying close attention to the wage growth trend ahead of next month’s decision on interest rates.

“Nearly three quarters (72%) of businesses in our latest survey said labour costs are the biggest cost pressure. They say the increase in employer NICs is the main driver of this.

“With job vacancies static, high levels of economic inactivity and £5bn of extra employment legislation around the corner, the Budget must give firms a reason to be optimistic.  Businesses need confidence to boost investment and drive the economic growth we all want to see.

“The number one priority for firms is that no fresh tax burdens are placed on them in the Budget. The Chancellor must also use her statement to invest in workforce health and skills.”

Read the full ONS data here.

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“The workplace health crisis is damaging for individuals, employers and the economy.  So, this report is a hugely important contribution to tackling the issue and helping businesses access and retain a skilled workforce.  The BCC’s evidence to the review was clear – employers want to be part of the solution but need support to play their part.

“The report supports several long-standing BCC recommendations including exploring a Statutory Sick Pay rebate for SMEs and pooled access for employee health support in the workplace. But at a time of surging business costs, support and incentives are crucial to ensuring businesses of all sizes can get involved.

“Alongside more access to workplace support, fixing the broken fit note system will be crucial to breaking down barriers and raising awareness of solutions.

“It’s now imperative that the Government works at pace to put the Mayfield Review recommendations into action. The UK’s economic future depends on the health and vitality of its workforce.

“But it is hard for many firms to see past a wall of rising costs, which presents a real barrier to better workplace health provision. That’s why firms need support and, with the Budget just weeks away, a commitment to keeping a lid on business taxes is vital.

“The Chancellor must also use her statement to help boost productivity and make sure every business has a strong pipeline of skilled labour. That should include, targeted youth employment support, reform of the apprenticeship levy and a long-term commitment to Local Skills Improvement Plans.

“In local communities across the country, Chambers are convening employers of all sizes and sectors to find practical solutions to skills and workforce challenges.  Engaging and supporting SME employers will be crucial to the successful implementation of the Mayfield proposals and resolving the health crisis.”

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“Businesses will be watching these talks very closely in the hope of divining some certainty on the direction of travel for global trade.

“There were some encouraging signs last weekend as the US agreed trade deals with Malaysia, Cambodia, Thailand and Vietnam, with a focus on tariffs and critical minerals.

“But a deal with China would be the major prize of this trip, given additional 100% duties are due to apply to Chinese goods exports to the US from Saturday morning.

“Hopefully China can reach terms with the US on export controls on rare earths and soyabean imports to avert these additional huge tariffs.

“Yale University Budget Lab’s recent update on the impact of tariffs on the US economy finds a persistent 0.4% reduction in GDP due to the impact of higher duties. This has big implications for businesses wherever they are based.

“Across the world, next Saturday will see the introduction of further section 232 US duties on imports of medium and heavy trucks and buses to the US. For the UK this means 25% duties on truck exports and 10% on buses.

“The US has justified these on the grounds of national security, given that 70% of domestic US freight is moved by truck or bus.

“Decisions on pharmaceutical and semiconductor tariffs are expected soon as well, which could have major implications for the UK economy.

“Many of our manufacturers will also be anxiously awaiting updates on whether US levies could be extended to more steel products, such as window and doorframes.

“With so many decions yet to be made, firms will continue to be wary, but an agreement between the world’s two biggest economies would go some way to settling nerves.”

The BCC’s US tariff explainer sets out all the developments on trade with the US and is regularly updated.

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The Trade Confidence Outlook results underline the need for urgent Government action, in partnership with business, to help smaller firms export more. Analysis by the BCC shows a 2% increase in UK exports would increase growth by 0.6%.  

This latest data was gathered by the BCC Insights Unit and the UK-wide Chamber network with the fieldwork conducted between 18 August and 15 September. Over 4,600 businesses across the UK (91% of whom are SMEs) responded online. 

Looking at either export sales or export orders in Q3 for micro exporters, the pattern is the same.  

Only 16% of micro-exporters, businesses with fewer than 10 employees, increased export orders in Q3 (18% in Q2), 27% reported a fall, and 57% reported no change.  

In contrast, 42% of large exporters, with more than 250 staff, saw a boost in overseas orders in the last quarter (29% in Q2), 11% reported a decrease, and 47% said they’d seen no change.  

Looking at export sales – only 18% of micro-exporters saw a rise in Q3 (20% in Q2), 26% saw a fall, while 56% reported no change. By comparison, 42% of large exporters reported increased sales, with 11% reporting a fall, and 47% seeing no change. 

The research shows sentiment among all exporters remains weak, with most struggling to see improved sales or orders. Only 24% of all exporters reported increased overseas sales, while 22% of all businesses saw a boost in export orders in Q3.  

The survey data underlines the importance of next month’s budget as an opportunity for the Chancellor to help boost exports. The BCC’s Budget submission is calling on the government to deliver a trade accelerator programme for UK firms, reform customs systems, and consult on a UK carbon border adjustment mechanism.   

William Bain, Head of Trade Policy at the BCC, said:  

“The growing disparity between the experience of the UK’s largest and smallest exporters is deeply concerning.  

“It underlines our call for urgent Government action, in partnership with business, to help smaller firms reap the benefits of trade.  

“Boosting exports is the quickest way to grow our economy, and our data should be a wake-up call for policymakers.  

“Business welcomes the real progress made on trade deals with the US, EU and India in recent months – and the Trade Strategy, launched at the BCC’s Global Annual Conference in June.  

“As these deals and strategies are implemented, new smaller exporters need greater help to fully reap the benefits.  

“Next month’s Budget is also an opportunity for the Chancellor to take decisive action to boost exports. The BCC is looking to work directly with government on trade accelerator programmes. We’re also calling for reformed customs systems, and full consultation on a UK carbon border adjustment mechanism.”  

What businesses are saying: 

“Brexit continues to impact our European business. Trump has had a major effect on our US sales.”  Small manufacturing firm in East Lancashire 

“Challenging times to run a small business that exports globally – we just can’t cope with another tax raid in the Autumn.” Small manufacturing firm in Cornwall  

“Having just lost all sales to the EU due to the uneconomical costs of GPSR and packaging registration, we are now facing the loss of one of our main clients…USA due to De Minimis changes. This accounts for 50% of our income.” Micro services firm in Cumbria 

“I’m not confident as the ability to trade with Europe is very difficult so we lost our markets due to Brexit, and our ability to trade with the USA is very hard and expensive due to tariffs and business uncertainty.” Micro services firm in the West of England 

“Continued problems at ports, which impact imports and exports. Should look to join a customs union with the EU for food, drink and animal products.” Small manufacturing firm in Ayrshire 

“This year our export business to the US has almost dried up completely after Donald Trump announced the tariffs. Although he reversed them our US customers are nervous, he’ll change his mind again. Shipping costs are increasing which is putting off buyers from elsewhere in the world.” Micro manufacturing firm in the West of England 

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Research by McKinsey suggests the net zero transition could be worth over £1 trillion to UK business by 2030. 

With the UN Climate Change Conference COP30 just weeks away, the BCC is calling for urgent Government action to fix funding gaps, tackle skills shortages and ensure policy stability.   

Among the recommendations in a new report, published today, the BCC is calling for ministers to:  

• Ensure innovation funding is available to support low carbon technologies from research through to commercialisation. 
• Develop a national green skills map to identify existing and future needs. 
• Commit to a clear, long-term net zero roadmap which gives investors and innovators confidence.  
• Deliver on grid connection reform to fast-track clean energy projects. 
• Simplify public sector procurement processes and environmental reporting in supply chains, to encourage low carbon investment by SMEs.  

The call to improve innovation funding is central to the BCC’s Budget submission ahead of the Chancellor’s statement next month.  

Today’s report is released as new BCC research shows businesses see high costs and limited funding as the main barriers to net zero progress. 

In a survey of over 2,000 firms (mostly SMEs), who were all at different stages of their green journey, nearly half (43%) of responding firms cited cost as a significant barrier in progressing towards net zero. Meanwhile a third (34%) said a lack of finance or grants was holding them back.  

The report has been produced by the BCC’s Green Innovation Challenge Group, drawing on expertise from businesses, academics and think tanks. 

It highlights the potential for the net zero transition to be worth over £1 trillion to UK business by 2030. And it sets out how many businesses are carrying the country’s rich tradition of innovation into the low carbon era.  

The report has 15 recommendations in total, many of them ‘revenue-neutral’, that can drive forward the take up of low carbon innovation.  

The BCC is calling on the Government to work in partnership with businesses on the issues and set up working parties to discuss the way forward.  

Shevaun Haviland CBE, Director General of the British Chambers of Commerce said: 

“The UK has the businesses, ideas and talent to lead the world in low-carbon innovation. I speak to these amazing firms and their workforces every day.  

“But without urgent action, we risk falling behind in the global race for green growth. 

“We need ministers to work with business to tear down the barriers on finance, skills and policy that are holding too many firms back.  

“Our report sets out practical recommendations to boost green innovation, reform grid capacity and procurement, and strengthen the skills of our workforce.  

“The call to improve access to innovation funding is central to the BCC’s budget submission. The Chancellor has an opportunity next month to start the ball rolling on this.  

“Now is the time for bold action from government so we can turbo-charge the UK’s low carbon transition. This will ensure we hit our net zero targets, guarantee green growth, and secure jobs for decades to come.” 

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“We are fast reaching the end of the road for crucial changes, that businesses desperately want to see, to be made to the Employment Rights Bill.

“There are some elements of the government’s proposals, as they stand, which place unnecessary burdens on businesses and could stifle recruitment, productivity and investment.

“Several of tonight’s amendments to the Bill, agreed by the Lords, represent critical interventions that will reduce the risk of unintended consequences for firms from this legislation.

“The government now has an opportunity to address businesses’ key concerns and demonstrate that they are willing to listen and recognise where changes are needed by accepting these amendments.”

The key Lords amendments supported by the BCC are:

• A six-month qualification period for unfair dismissal rather than from day one. This will mean no threat of employment tribunals if employers have genuine reasons to dismiss someone in those six months for reasons such as underperformance or failure to pass a probationary period.
• Reducing the burden on businesses by removing the need to repeatedly offer guaranteed hours contracts to those who would prefer the flexibility of zero hours.
• Including a definition of seasonal work, so that this is reflected when employers have to determine regular hours.
• Retaining a turnout threshold of 50% for industrial action ballots to be valid, so action is representative of the wishes of the membership as a whole.

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“Sticky inflation has been in danger of becoming a uniquely British disease as the UK continues to stand out from the rest of the G7.

“Today’s CPI rate of 3.8%, coming in lower than expected, could provide some reassurance that we are at the peak, as expected by the BCC and Bank of England. However, the picture is mixed. Core inflation has slowed, but the reintroduced producer price data show factory gate prices rising by 3.4%, hinting that cost pressures remain in the pipeline, particularly for food and manufacturing.

“Our latest survey data shows that concern about inflation has been rising again and is now the second biggest issue for firms after taxation. But the two are closely linked: for the past year, businesses have told us that the rise in employer National Insurance Contributions has fed directly into price pressures and weakened investment. Labour costs continue to be the main cost pressure, cited by 72% of businesses.

“Higher energy bills are also a concern, cited by 50% of firms, with the rise in the energy price cap at the start of October indicative of the sustained pressure. Without action to help firms bring down costs, there is a risk of a repeat of a 2022-style energy shock.

“The upcoming Budget will be pivotal. Further tax rises could exacerbate a climate of low growth and rising costs. Unlocking growth through increased investment in infrastructure, AI adoption, and a bold push to increase exports, is the only long-term solution.”

More information on the ONS data can be found here.

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“UK trade is heading along two distinct paths. There is a steady rise in services, which already account for more than half of UK exports, but trade in goods remains in flux. Manufacturers are still adjusting to the new realities of global trade policy and uncertainty around further tariffs remains high.

“Trade in goods with the US has plunged since higher tariffs were introduced. The full impact of the US de minimis exemption removal is yet to be fully reflected in the data and is weighing heavily on UK traders. In many sectors, trade in goods with the EU and other non-EU countries also stayed flat during August.

“Growth remains fragile and more needs to be done to leverage new and upgraded trading terms with the US, the EU and Indo-Pacific regions to boost our export performance.

“Our Budget submission calls upon government to implement customs reforms and trade accelerators to make goods trade simpler, cheaper and faster with key UK markets. This data suggest that should be even more of a priority for policymakers.”

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