New research shows huge impact of Iran war on Midlands businesses

The research - carried out by the Black Country Chamber of Commerce alongside the Greater Birmingham, Coventry, Warwickshire and East Midlands chambers - reveals 80% of businesses have seen costs increase because of the conflict.

Some 64% of manufacturers said they had faced ‘moderate or significant’ extra costs with 5% saying the increases threatened their viability.

Sarah Moorhouse, CEO of the Black Country Chamber, contended the survey highlighted the need for more government support with energy costs and better contingency planning to develop price stability.

The survey was carried out between 11 May and 8 June and saw 698 businesses of all sizes and sectors across the Midlands respond.

It also showed that 12% of regional exporters had paused or withdrawn from certain markets, while 26% said investment or capital spending had been impacted because of the ongoing crisis.

Supply-chain disruption was particularly widespread among industrial firms. Almost half of manufacturers (47%) experienced delays to incoming materials or supplies, while 38% reported reduced availability of essential inputs.

50% of manufacturing businesses and 41% of services firms called for greater energy cost stability or support, while 47% and 36% respectively urged the government to improve contingency planning.

"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," Moorhouse stated. "The fact that 80% of businesses are seeing increased costs - including 64% 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 grow with real confidence," she added. 

"It is critical that the voice of business is heard, and we will continue to bang the drum for our members for as long as the crisis continues."

The survey was commissioned by the chambers to assess the impact of the conflict, which started on 28 February and triggered a huge spike in oil prices and the blockade of the Strait of Hormuz.

"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," said Raj Kandola, deputy CEO of Greater Birmingham Chambers of Commerce. "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."

Corin Crane, CEO of Coventry and Warwickshire Chamber of Commerce, added: "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."

East Midlands Chamber CEO Scott Knowles concluded: "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.

"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."

To download the report, please visit - US Iran War report - Issuu.