Rising costs for energy, borrowing and products and materials in the build-up to Christmas are the top concerns for Midlands businesses in the coming weeks, according to the latest report from accountancy and business advisory firm BDO LLP.
The bi-monthly Rethinking the Economy survey of 500 mid-market businesses has revealed that the rising cost of products and materials is causing the greatest concern for nearly a third of businesses in the region.
The survey showed that a third see higher energy costs as their biggest challenge in the final few weeks of the year, together with rising interest rates and the cost of borrowing (32%).
As businesses in the region face significant cost pressures, many are taking proactive steps to address the latest challenges facing their business. According to the Rethinking the Economy survey, 29% of Midlands companies are taking on new debt or extending existing overdraft facilities – the highest rate of any other UK region – while a further 27% intend to launch new products and services to create additional revenue streams.
However, despite the challenges facing businesses in the final month of the year, an overwhelming number of Midlands businesses (76%) stated that they feel more optimistic about business prospects going into 2023, compared to this time last year, marking a shift in sentiment since COVID-19 restrictions were lifted.
Kyla Bellingall, regional managing partner at BDO LLP in the Midlands, said: “Hearing businesses report that they are in a better place than this time last year is a positive but there’s no doubt that trading conditions remain extremely challenging for many Midlands businesses, following a period of sustained pressure over an extended period of time.
“However, despite the concerns surrounding rising costs, the Midlands is a resilient marketplace and many businesses are well positioned and primed to ride out the economic storm.”
The Rethinking the Economy survey showed that more than half of Midlands businesses have changed their approach to raising funding in the last three to six months due to the economic climate, with 17% admitting that they are seeking funding earlier than planned to ease inflationary and other pressures on the business.
Bellingall added: “With rising costs set to be an enduring theme throughout next year, Midlands businesses cannot do this alone and are calling for more targeted support to help secure the long-term future of mid-market businesses – the engine of the UK’s economy.”
According to the survey, nearly a third of regional businesses believe the Government should be providing more investment in apprenticeships and skills programmes for businesses in 2023, with a further 30% looking to the Government for new education and skills policies at a local level, to align qualifications with businesses’ needs and help to ease skills shortages.
