Greater Manchester Chamber of Commerce has released the findings of its Quarterly Economic Survey (QES) for Q1 2025, providing a decisive snapshot of the region's economic health amidst a backdrop of national and international challenges.
The survey, a key indicator of business sentiment and confidence, reveals a complex picture with both areas of concern and pockets of resilience.
Results showed that businesses are uneasy about inflation, with many respondents saying it is their number one concern due to rises in pay. Concerns were also raised about input costs and taxes. There is a decreasing trend in planned workforce additions and recruitment activity, with levels at their lowest since this time last year. National employment data for January 2025 shows stability, with unemployment at 4.4%, but the UK also faces skills mismatches and the challenge of over 9 million economically inactive people.
Subrahmaniam Krishnan-Harihara, Deputy Director of Research at Greater Manchester Chamber of Commerce, said: “With the upcoming increases in the employers National Insurance contributions, some employers are holding off recruitment. Businesses are also increasingly concerned about the financial impact of pay settlements, higher raw material prices and utility bills. Inflation remains the primary concern because of continued upward pressure on prices. Although headline CPI has gone down marginally in February, inflationary pressures remain. Costs have gone up and there are only so many additional costs that a business can absorb, which means they are forced to put prices up.
“Business confidence has taken a hit, with optimism regarding profit margins declining significantly. Consequently, there has been a reduction in investment measures, with capital investment falling below 2024 levels.
“Looking ahead, it's clear that there are no easy solutions. The headwinds from national policy, international trade tensions, and ongoing cost pressures are significant. However, Greater Manchester has a history of resilience and innovation, which local and national government can build on. This will involve giving long-term policy certainty, investing in skills and fostering an environment that encourages growth and innovation.”
Findings from the survey also showed that demand from customers in the UK improved in the manufacturing and construction sectors, while the services sector showed a downturn. Demand from overseas customers, however, declined along with a dip in business confidence.
Overall, the GM Index, the QES based composite economic indicator, showed a reduction in Q1. In Q4, the GM Index was 27, which was a noticeable improvement relative to earlier in 2024. Led by the dip in international demand and the slowdown in the services sector, the GM Index now stands at 18.5.
Subrahmaniam added: “The decrease in the GM Index of approximately 9 points from the previous quarter mirrors the stagnation observed in mid-2024. This regional trend aligns with national data, which indicates a contraction of the UK economy by 0.1% in January 2025.
“The service sector has experienced a downturn, while manufacturing and construction have shown improvements, contrasting with national trends. Export sales and advance export orders have decreased for both manufacturing and services, with a particularly sharp decline in the service sector. This trend is reflected across all Greater Manchester sub-regions, as well as in other major UK cities, indicating a broader stagnation in the UK's international trade performance.”
The results of the Quarterly Economic Survey were presented to an audience of business leaders from across Greater Manchester at the Chamber’s Economic Briefing this week. The presentation was followed by a panel discussion featuring Subrahmaniam; Allan Allison, Vice-President, Apprenticeships at QA Ltd; Alasdair Rankin, MD of Aitken Turnbull; and Martin O’Shea, Finance Partner at Addleshaw Goddard. The panel discussion emphasised the fact that Greater Manchester businesses have demonstrated a lot of resilience in the face of serious business challenges and called on government to form policies that enable business to build on this underlying resilience.
For more information about Greater Manchester Chamber of Commerce and its Quarterly Economic Survey, call 0161 393 4321 or visit: https://www.gmchamber.co.uk/chamber-research/quarterly-economic-survey/www.gmchamber.co.uk