Highlights
• 86 per cent of those responding felt that the Cordoba Agreement would be good for business. Just 1 per cent thought it would not be good for business and 13 per cent had no view.
• Two thirds of those responding had experienced some difficulty with telephone made calls to Gibraltar since the telephone restrictions were lifted in mid-February.
• 88 per cent said that they would support a park and ride scheme from the frontier to Casemates.
• Staff recruitment and retention was the issue which respondents thought most likely to affect their business over the next 12 months, followed by increased business costs and increased competition from Spain.

Business Climate
Just over half of those responding (52%) reported an increase in sales in 2006 compared to 2005. However, one fifth said that they had seen a decrease in sales over the same period (29% saw a decrease the previous year). This implies that the business climate actually continued to improve through 2006. As with last year the majority of those businesses seeing a decline in sales were in the retail and wholesale sectors. A quarter of those responding said that there had been no change in conditions between 2005 and 2006

When asked about the outlook beyond 2006 the picture was more mixed. Just over half (57%) thought that trading would remain the same as 2006, but as with last year’s survey, a third of those respondents, particularly in professional services, thought that business would improve.

Just 10 per cent of respondents thought that trading would deteriorate during 2007. These respondents were from the retail, wholesale and transport sectors. Trading remained good across most sectors although some businesses in retail and wholesale sectors experienced sales declines. It is unclear as to the reasons for these declines but they reflect a continuing trend of the vulnerability of certain parts of the retail and wholesale sectors.

Beyond 2006 the picture was understandably more uncertain with a quarter of respondents not giving any view on the trading environment. However, just under two thirds of those responding (60%), thought that trading would be the same or better than 2006.

Business Costs
In last year’s survey we asked members whether they had noticed the increases in the costs of utilities (electricity, rates & water) in 2005. More than three quarter of those responding (77%) said that these costs had increased noticeably during 2005. This year we asked members to give indications of other business costs as a percentage of their overall costs (not including stocks).

The responses varied widely depending upon the sector, but the average of the costs paid by each sector appears in the table below.

No surprise that wages form the biggest cost for all businesses with it forming an average of around half of total costs for all respondents. However, the proportion varied widely across sectors. Interestingly they represented a higher proportion of overall costs in Legal services (65%), Insurance (60%), Banks (57.5%). Although the Wholesale, Construction and Maritime sectors all scored high averages the samples in these three sectors were insufficient for them to be considered truly representative.

Rent and Rates together did not appear to form an overly significant proportion of business expenses on average although it did for Retail, Legal services and Hotel & Catering sectors as might be expected. Anecdotal comments given by respondents would imply that rental increases were causing some retailers to consider the continued viability of their businesses in Main Street.

Cordoba Issues
There was overwhelming support for the Cordoba Agreement with 86% of respondents saying that they thought the Agreement would be good for Gibraltar’s business community. Just 1% thought it would be bad and 13% held no view as to the impact of the Agreement.

Two thirds of those responding said that they had experienced either some or significant disruption to their telephone connections since the lifting of restrictions in mid-February.

Somewhat surprisingly three quarters of respondents said that the freer-flowing frontier had had no noticeable impact on their business, although a quarter said that they thought it had had a positive impact on their business. Again anecdotal comments indicate that numbers of visitors to tourist sites are up sharply on last year. This is attributed to people not having to endure long queues to enter Gibraltar and so it is thought that they are more predisposed to spend money once they are here.

In an attempt to reduce traffic congestion 88% of respondents supported the idea of a park and ride shuttle bus between the frontier and Casemates. This question was proposed before the recent announcement by the Government of its intention to introduce this scheme once the completion of the new airport terminal and associated link roads have been completed.

Issues likely to affect business in the future. As with last year the issues which respondents thought likely to affect their business the most were staff recruitment and retention (24% of respondents put this as the most important issue which they thought likely to affect their business.) After this came increased business costs (19% of respondents) followed by increased competition from Spain (10% of respondents).

Of the most important factors affecting business over the next 24 months there were a variety of responses across all sectors.

The principal concerns are summarised in the table below.

As with last year the survey provided a lot of useful information. This will be used by the Board over the coming months to formulate policy and lobby Government for changes that will benefit members.

If you have any questions about the survey or the results please contact the Chamber on 78376 or email on info@gibraltarchamberofcommerce.com