Midlands business leaders fear supply chain disruption will affect their ability to offer the usual range of products and services, impacting end of year trading, according to new research from accountancy firm, BDO.
The bi-monthly Rethinking the Economy survey of 500 leaders of medium-sized businesses reveals a third of businesses in the region are planning to increase the prices of their goods and services as a result.
Despite these pressures, more than half (58%) of companies in the region expect to see their revenues return to pre-pandemic levels within 12 months.
There is a sense of cautious optimism looking into 2022 with nearly a quarter (22%) of Midlands companies surveyed prioritising investment in international expansion and creating new jobs (20%) to support future business growth. One in five Midlands businesses are looking to drive growth into the US next year and 22% are looking towards Asia for sources of growth.
The research provides an insight into the mid-sized businesses which BDO calls the ‘economic engine.’ This group of companies comprises mid-sized, private equity-backed and AIM-listed businesses, which contribute £1.3 trillion to the economy and create almost 8 million jobs.
When asked which area of public spending would have the greatest positive impact on their business in 2022, one in five (22%) of the region’s companies called on the Government to invest in public services as a priority for growth.
Nearly a quarter (23%) of businesses shared concerns that a decision from the Bank of England to increase interest rates could have the greatest impact on their business over the next 12 months.
Tim Foster, partner at BDO in the Midlands, said: “Businesses in the region have been hoping for a strong finish to a year which started with so much uncertainty. Businesses have continued to face issues of rising costs, supply chain challenges and talent shortages.
“According to ONS data published at the end of November, economic output in the West Midlands is still down nearly 10% and the East Midlands is around 5% below pre-pandemic levels, lagging behind regions such as Yorkshire, the North West and North East.
“Despite this and the continued speculation around interest rate rises ahead of the Monetary Policy Committee decision later this month and fresh concerns around COVID-19 restrictions, mid-market Midlands businesses are demonstrating the ambition and their hallmark resilience as they plan for 2022.
“It’s positive to see investment intentions around international growth and creating new jobs, which suggests we will see a strong recovery in the region’s new economy.”
