'Taxed out of existence': What Suffolk's latest business survey tells us about the local economy

Why it matters: The results — gathered before the full effects of recent Government tax changes had begun to filter through — suggest the picture for Suffolk businesses could get worse before it gets better.

The big picture: Most of the survey's measures remained in negative territory, meaning a greater proportion of businesses reported worsening conditions than improving ones. A handful of indicators showed modest gains: more manufacturers reported an increase in domestic sales (28%) than a decline (24%), and service companies recorded a positive balance in overseas sales of five percentage points (19% versus 14%). A greater share of manufacturers also reported an expanding workforce than a contracting one.

But those bright spots are the exception, not the rule.

By the numbers: The data paints a difficult picture across several key areas.

• Cashflow: Manufacturers came in at minus 30 percentage points (11% reporting an improvement versus 41% recording a deterioration). Service firms fared only slightly better at minus 19 percentage points (17% versus 36%).
• Investment in plant and machinery: Far more businesses are scaling back than increasing — 33% of manufacturers and 36% of service companies reported cuts, compared with 19% and 14% respectively reporting increases.
• Training investment: Fifteen per cent of manufacturers reported an increase in training spend, compared with 26% cutting back. For service firms, the figures were 15% and 31% respectively.
• Profitability: Expectations are gloomy. Thirty-seven per cent of manufacturers expect a contraction in the next quarter, against 33% expecting improvement. Among service firms, a worrying 53% expect profitability to fall, compared with just 24% projecting an increase.
• Prices: Sixty-five per cent of manufacturers and 43% of service firms expect to increase their prices, with 84% of those citing rising labour costs as a contributing factor.

What they're saying: An Ipswich-based IT and marketing company said: "We have paused all recruitment since the 2024 budget, when we could see the cost of employing people is just becoming impossible. So we are focussed on trying to do more with a smaller team, but this will of course not be sustainable for very long."

A commercial estate agent with branches across Suffolk said: "We are being taxed out of existence, no incentive to grow the business or to employ new people."

A components manufacturer with a regional presence went further: "Frankly, I'm beginning to wonder if being an employer is worth it. As the tax burden goes up so does the stress level. I cannot afford to invest in the latest technology and so I start to lose my competitive edge. Then there are all the new HR rules which frankly mean that I am becoming increasingly unlikely to recruit. I feel that if I put one foot wrong, I will end up in a Tribunal."

A manufacturer in West Suffolk added: "The Government continues to show a lack of understanding of the drivers for private small businesses, so increased tax burdens are limiting investments."

The bigger picture: The survey was conducted during January to March 2026 — before the consequences of the conflict in the Middle East and further Government tax changes, including hikes to Business Asset Disposal Relief, mandatory Making Tax Digital for organisations with over £50,000 turnover, and reduced inheritance tax relief for business assets, had begun to feed through. Suffolk Chamber of Commerce says those factors are likely to weigh further on conditions in the coming months.

Paul Simon, Suffolk Chamber's head of public affairs, said: "Doing business in Suffolk is still harder than it needs to be and, as these personal recollections show, this is having a wholly negative impact on companies and is taking its toll on business owners and managers."

Doug Field, chair of Suffolk Chamber's Economy Group, added: "There's real resilience among Suffolk's businesses, but that doesn't mean the situation isn't serious. Too many firms are treading water rather than moving forward. Government needs to give businesses the stable foundations to invest and grow. There's no shortage of ambition in Suffolk, just too many barriers standing in the way."

The bottom line: Suffolk's businesses entered 2026 under significant strain, with falling investment, squeezed cashflow, and dim profit expectations — and the full weight of the Government's recent tax changes has yet to arrive.

This article cost us ~£30 to produce

It's free for you to read thanks to the generous support of our partners. Please support us by supporting them. Alternatively, you can directly fund more journalism like this by becoming a member for just £4.75 per month. You'll get our best content delivered straight to your inbox before anyone else, and the option to discuss our reporting with our journalists.