Shoppers hit the Boxing Day sales in London
People walk along a busy shopping street, during the traditional Boxing Day sales in London, Britain, December 26, 2022. Reuters

British businesses are gloomy about prospects for 2023 as they face the likelihood of a surge energy bills and ongoing post-Brexit trade difficulties, the British Chambers of Commerce said late on Wednesday.

The BCC's quarterly economic survey - the largest private-sector survey of business sentiment - showed that 36% of businesses expect lower profits this year, compared with 34% who expect a rise. The proportion expecting higher sales over the next 12 months dropped to 44% from 54% six months earlier.

The survey took place from Nov. 7 to Nov. 30 and received responses from more than 5,600 firms, mostly smaller businesses.

"The situation remains critical for the majority of SMEs who find themselves cut adrift by monumental inflationary pressures, often driving triple-digit percentage cost increases, particularly on energy," the BCC's head of research, David Bharier, said.

A current 18 billion pound ($22 billion) programme of energy subsidies for businesses expires at the end of March, and earlier on the Wednesday the government said it would publish new plans next week.

However, finance minister Jeremy Hunt warned businesses that he viewed the current system as unsustainable, and that any future support would be on a smaller scale.

"The outlook from businesses remains bleak," BCC director general Shevaun Haviland said. "Providing businesses with clarity regarding the new energy support package must be top of the government's agenda," she added.

Smaller businesses continued to face difficulty trading with the European Union after Brexit, and also when sending goods between mainland Britain and Northern Ireland, due to the EU's requirement for checks on British goods moving to the province, which has an open border with EU member state Ireland.

"The impasse over the Northern Ireland Protocol continues to loom and the UK government must work with the European Commission to reach a negotiated solution on its business compliance burdens," Haviland said.

($1 = 0.8306 pounds)