October 6, 2022

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Research: Most companies can hardly afford higher costs |  Economie

Research: Most companies can hardly afford higher costs | Economie

Business confidence is decliningMost companies in the Netherlands are unable or only partially able to pass on the significant cost increases that have occurred recently. And, in part, business confidence is deteriorating across a broad front.

This is the result of joint research conducted by, among others, the Central Bureau of Statistics (CBS), business organizations and the Chamber of Commerce (KVK). Inflation has risen sharply since the Russian invasion of Ukraine. Energy costs in particular are rising, leading to higher costs for business. Many raw materials have also become more expensive, in part due to logistical disruptions.

Half of the thousands of entrepreneurs surveyed indicated that they could pass on a small portion of these cost increases in prices or rates to their customers. Roughly 9 percent can’t even pass the cost increases at all. Only more than 3 percent succeeded in fully conveying cost increases to customers.

Especially in the rental and trading of real estate, culture and sports, it is difficult to increase prices as much as the costs. Here, 80 percent of entrepreneurs said they were unable to pass on cost increases for a small fraction or at all.

Business confidence is declining

The numbers also show that business confidence waned in nine of the eleven industries in the second quarter, although sentiment remained positive everywhere. The decline was even greater in the hospitality industry. The mood also deteriorated significantly in the wholesale sector. In general, companies operating in the construction industry have become somewhat more optimistic. Trust is also the highest in all areas out there.

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More than six out of ten entrepreneurs finished the first six months with a profit. A tithe had a loss and then there was a group that didn’t make much profit or loss. But in almost all industries, entrepreneurs were mostly pessimistic about the expected economic climate in the next three months. Only in the cultural sector do people count on improving balance.