Greater Manchester Chamber of Commerce has released the findings of its Quarterly Economic Survey, 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.

Leading insolvency firm Clarke Bell has revealed a striking month-on-month rise in Members’ Voluntary Liquidations (MVLs), completing nearly four times as many solvent closures in February 2025 as in January.

The increase appears to signal a growing number of directors choosing to shut down solvent businesses while the tax landscape remains favourable. The trend has emerged in the wake of the government’s Spring Statement, which many SMEs felt lacked critical short-term support.

John Bell, Director at Clarke Bell, noted: “The increase in MVL activity suggests that more directors are opting to take proactive steps in the current economic climate. Uncertainty around future tax changes, combined with rising business costs, is prompting many to review their position and plan ahead.”

Spring Statement Reaction Spurs Directors to Act

Unveiled in March 2025, the Spring Statement laid out ambitious economic plans focused on future investment in areas such as housing and defence. However, critics argue it failed to address urgent issues facing smaller businesses—especially rising costs.

With escalating National Insurance rates, an increased National Living Wage, and continued inflation, many directors are reassessing their operations and financial strategy, feeling the pressure to act before conditions worsen.

Industry sentiment suggests the lack of immediate intervention has left many SMEs feeling exposed, leading some to proactively consider closure.

MVLs on the Rise as Part of Forward Planning

A Members’ Voluntary Liquidation is a structured way to wind up a solvent company, allowing funds to be distributed tax-efficiently to shareholders. February’s sharp increase may reflect directors opting for retirement, company consolidation, or a change in direction in light of economic uncertainty.

Clarke Bell reports that although MVL activity had remained steady over the past year, February marked the first significant month-on-month escalation.

John Bell added: “While many companies are continuing to trade successfully, others are reaching a natural endpoint. We are seeing more directors assessing their business plans and deciding that, for various reasons, this is the right time to close their company. That may be influenced by tax considerations, succession planning, or simply wider economic uncertainty.”

Business Owners Preparing for Future Tax Policy

As attention turns toward the Autumn Budget and the Comprehensive Spending Review, company owners are expected to continue reviewing their exit strategies. Possible changes to Capital Gains Tax and Business Asset Disposal Relief are especially concerning for those looking to access company funds efficiently.

Clarke Bell’s data indicates that, unless conditions change, more solvent companies may opt for closure in the months ahead.