Highlights
Retail & wholesale sector the most sensitive sector to cost increases
Private sector remains optimistic about future of Gibraltar’s economy.

Concern remains over tax reform
All sectors cite staff recruitment and retention as one of their biggest problems in future.

Sources of business
The firms responding said that slightly more than half (52%), of their business comes from local trade; nearly one third (31%) of their business came from international clients; day visitors, day trippers to Gibraltar accounted for 12% of business whilst cruise visitors contributed just 3% to respondents’ businesses.

Business Climate
Half of those responding reported an increase in sales in 2005 compared to 2004. However, 29% said that they had seen a decrease in sales over the same period. The majority of these businesses were in the retail and wholesale sector. Just under one fifth of those responding (19%) said that there had been no change during the period. This confirms anecdotal evidence during the second half of last year that retailers have had their margins squeezed as costs have increased whilst sales have remained flat for many shops.

When asked about the outlook for 2006 the picture was more mixed. Half thought that trading would remain the same as 2005, but a third of those respondents, particularly in professional services, thought that business would be better. Less than one fifth (17%) thought that trading would deteriorate during 2006.

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 2005.

Seasonality of business
Two thirds of respondents said that there was no seasonality to their business. The majority of these were mainly in the non-retail/wholesale sectors.

Sensitivity to cost increases
77% of respondents said that the costs of rates and utilities had increased noticeably during 2005. With just one or two exceptions the respondents which had not noticed these increases were all trading in the finance and professional services sector.

Methodology
The last Trading Conditions Survey conducted by the Chamber was in Summer 2004. It covered the 18-month period between January 2003 and June 2004. This survey was conducted between January and the end of February this year and covers the whole of trading in 2005. This edition of B2B is the first since the full results became available. 279 surveys were posted and we received 83 completed surveys – a great response rate of 30%, very much in line with previous surveys. Those members responding employed 2,400 people in Gibraltar or about one fifth of the private sector workforce.

Thank you to all those members who took part.

Future Trading
What was perhaps more revealing was that nearly two thirds of respondents (64%) said that increased business costs would be the single most important issue facing their business in the year ahead. This was the largest single issue given by respondents, followed by recruitment and retention of staff (45%), competition with Spain (37%) and then increases in Government red tape (28%).

This was the first time that the Chamber asked members about dealing with specific Government departments and the effect this had on running their business. Comments were mixed but members in the main tended to heap more praise than scorn on various Government departments. Credit where credit is due. For ease of viewing we have summarised the various responses in the cross-tabulation below.

Pensions Debate
77% of respondents said they did not know enough about the proposed Provident No 3 Scheme with only a slightly lesser percentage (66%), expressing a desire to know more. Several respondents commented that there was no independent source of advice.

When asked if they thought whether pensions should be mandatory there were forthright views on both sides of the divide: 55% responded that they should not be mandatory whilst 41% said that they should be.

Government - Business Friend or Foe?
On a sliding scale, members were asked if they thought the Government was responsive to the needs of business. Just under one fifth (18%), responded yes in the majority of cases, one sixth (16%) responded by saying that the Government was sometimes responsive. By far the largest category (37%), said that it depended on the case.

Perhaps less optimistically 14% responded by saying that the Government was not usually responsive to the needs of business and 12% of respondents said that Government was not at all responsive to the needs of the business.

Future business needs
Respondents were asked what they thought would be their main business needs in the future. Always a tricky one due to the variety of businesses operating on the Rock. We tried to categorise the areas we thought most likely to coax respondents. The results were quite enlightening although as this was the end of the survey the response levels did tend to drop off somewhat. Nevertheless some discernible trends did emerge.

There appears to be a need for business advice, particularly with respect to planning and growth. This would appear to be good news for the Rock’s professional services industry of accountants, tax specialists and lawyers. It is likely to bring cheer to the business advisers of local banks too.

Staff development and training is an area that many respondents identified as one of their top three business needs in the next year. The increased number of training firms which have set up in Gibraltar offering business training are likely to be beneficiaries of this.

Summary
These results show that some burning issues persist for many sectors in Gibraltar: continued uncertainty over tax for the finance sector, cost increases for the retail and wholesale sector and staff recruitment and retention for just about every sector. Some of these, such as tax, are outside our control. We can influence others though. The Chamber has flagged up the issue of rates increases several times in the last 12 months, particularly for our members in the wholesale and retail sectors. It is good to see that our lobbying efforts have borne some fruit in the recent budget on this issue.

We will continue to lobby for our members’ interests. However, we can only do this effectively if we are aware of the particular issues you face.

Much useful information can be gleaned from this year’s survey. If you have any comments or questions on the results or suggestions about topics for future surveys, then please contact the Chamber on 78376 or send us an email to info@gibraltarchamberofcommerce.com