The Chamber’s Quarterly Economic survey for the final three months of 2022 showed that significant challenges on costs, recruitment and the value of Sterling persisted to a significantly high degree among both service and manufacturing firms.

However, following the low point that followed the disastrous mini-Budget under former Prime Minister Liz Truss and the collapse in the markets that ensued thereafter, there is cautious optimism among bosses that turnover and profit will begin to improve in the early months of 2023.

The service sector bounced back to a more respectable level during the fourth quarter of 2022 and manufacturers saw an improved picture for their overseas sales.

However, the headwinds remain strong. Cashflow for manufacturers in West and North Yorkshire is notably poorer than the rest of the country and employment and investment prospects remain weak in West and

North Yorkshire as firms face a situation in which they are concentrating on the here and now. Nationally, only 24 per cent of business said their cash flow has increased over the last three months, while 30 per cent have seen it decrease.

With both the British Chamber of Commerce (BCC) and the Bank of England predicting a protracted recession firms are braced for a tough 2023. BCC expects to see the country return to economic growth by this point next year and for inflation to peak at 11 per cent before falling to five per cent by the end of 2023.

Amanda Beresford, chair of West & North Yorkshire Chamber of Commerce, said: “There is no getting away from the fact that 2022 finished on a challenging note for our region’s economy. After a year of grappling with increasing prices and difficulties on the supply side of doing business, firms in our region have had no option other than to get comfortable with being uncomfortable.

“While the impacts of the numerous difficulties our economy faces are still being felt keenly, we should take heed of the fact that there are numerous signs that business leaders here in Yorkshire are beginning to see indications of optimism on the horizon.

“Question marks remain over what happens when the energy price cap comes to an end in March and, as a Chamber, we will continue to press ministers on ensuring energy costs do not become unsustainable.”

Mark Roberts, Leeds City Region Enterprise Partnership chair, added: “The final Quarterly Economic Survey of 2022 does present some positive ‘green shoots’ across the business base in West and North Yorkshire.

“However, there are still some key challenges that businesses are facing that are likely to linger into next year. Inflation is a key cost pressure across the entire business base, cited by 80 per cent of manufacturing firms and 79 per cent of service sector businesses.

“Whilst the two issues are linked, firms are significantly more concerned about inflation than interest rates, likely due to the more immediate impact which inflation is having on input prices.”

Firms dismantle plans for investment as inflation soars, says Chamber