Mixed start to 2025 for business as sales hit by tariffs and other challenges – Chamber report
Businesses across Greater Birmingham have seen a mixed start to 2025 – with sales in the manufacturing sector hit by a “challenging environment” and new US trade tariffs.
The pressures on manufacturers are revealed in Greater Birmingham Chambers of Commerce’s Quarterly Business Report for the first three months of 2025 as industry geared up to face the effects of trade tariffs imposed by President Trump.
However, many firms remain cautiously optimistic about sales growth despite a lowering of profit expectations according to the quarterly report, a major barometer of West Midlands business sentiment.
The report has seen business leaders call for a new “roadmap” to reduce costs, reform business rates and boost trading conditions as 2025 unfolds.
Henrietta Brealey (pictured), Greater Birmingham Chambers’ chief executive, said: “The latest Quarterly Business Report highlights a mixed start to 2025 for Greater Birmingham businesses.
“Following the positive direction of travel on domestic demand at the end of 2024, sentiment has dipped slightly which has been driven by a notable decline in sales within the manufacturing sector.
“While the services sector proved more resilient, the overall domestic environment has proved challenging when it comes to stimulating business growth.
“Export demand has also weakened, which will have been partially driven by the uncertainty created by President Trump’s recent and expected announcements of tariffs on a range of UK exports to the United States.”
The economic survey, produced in partnership with Birmingham City University, reveals that the first quarter of the year has seen a slight dip in domestic sales growth with 44 per cent of respondents increasing their UK sales volumes in the first quarter, marking a fall of three percentage points since the final quarter of 2024.
Meanwhile, 36 per cent cite that their domestic sales remained constant throughout the first quarter – up from 35 per cent in Q4 – while 20 per cent have seen a decrease.
The fall in domestic sales demand has been felt most acutely by manufacturers with just 31 per cent reporting an increase in sales in the first quarter.
Jude Pearson, interim director of Engagement, Enterprise and Innovation at Birmingham City University, said: “Notably, the manufacturing sector reported a pronounced decline in the proportion of businesses reporting increased overseas, which fell from 53 per cent to 33 per cent over the past three months.
“From a domestic perspective, the Q1 survey indicated a continued decline in sales and bookings as reported by one in five over the last quarter.”
The survey shows that the first quarter has seen a downturn in business confidence amongst exporters with just 27 per cent of respondents seeing an increase in export sales, a decrease from 33 per cent the previous quarter.
Meanwhile, 58 per cent of respondents said their export sales remained constant during the first quarter while 15 per cent saw a decrease.
Raj Kandola, director of External Affairs at the GBCC, added: “The Chancellor’s self-imposed fiscal rules leave very little headroom as we approach a crucial period for businesses.
“At the recent Spring statement, the Chancellor made it clear that taxes would not go up – businesses up and down the country no doubt breathed a sigh of relief given the disproportionate impact they suffered from the announcements made in the October budget.
“However, as our latest analysis shows, concerns around corporate taxation remain prevalent as businesses begin to adapt to the changes in the National Insurance framework and the national living wage.”
The survey found the first quarter of the year had seen relative stability in business headcount with 27 per cent of respondents increasing their workforce and 61 per cent retaining existing staffing levels.
Meanwhile, price pressures remain a continuing issue, with 53 per cent saying their prices were likely to rise over the upcoming quarter, three percentage points higher than Q4, marking the highest figure recorded since Q4 2022.
Henrietta Brealey added: “The ask from local businesses is loud and clear – a roadmap for reducing costs, reforming business rates and improving trading conditions is needed to help boost business confidence and set the tone for a successful year ahead.”
A launch event for the Q1 report – taking place at Birmingham City University’s Curzon Building on Tuesday 29 April – focuses on bridging the skills gap in Greater Birmingham.
Guest speakers include Mahfia Watkinson, policy manager (Insights) at the West Midlands Combined Authority, and Stuart Murty, head of learning and development at Balfour Beatty Vinci.
