Monday, April 15, 2024

High costs and access to capital stifle Midlands business growth

High costs and difficulty accessing capital continue to stifle growth for Midlands businesses, according to new data from accountancy and business advisory firm, BDO.

BDO’s latest bi-monthly Economic Engine survey of 500 mid-sized businesses has revealed that cost pressures will remain a significant challenge for regional companies over the next six months, with half of businesses (50%) concerned about higher operational costs, including rent, energy bills and the cost of borrowing.

More than a third of regional businesses (40%) admit that sourcing new capital from private and public sources is a top concern, with 39% stating that they will struggle to expand their business in the coming months, through entering new markets or increasing their physical footprint.

Ahead of next month’s Spring Budget, Midlands businesses are calling on the Government to address ongoing issues around costs, skills and taxes.

The survey showed that nearly half of regional businesses (44%) would like to see more support to resolve ongoing staff and skills shortages, including reforming the Apprenticeship Levy and placing greater focus on helping working parents, with more than a third (39%) calling for better access to private capital and government grants.

Kyla Bellingall, regional managing partner at BDO in the Midlands, said: “In what could be the last Budget before a general election, the Government has a real opportunity to place growth and the interest of businesses at the centre of its announcement.

“Time and again, Midlands businesses have called on the Government to act with greater purpose on key areas such as costs, access to capital, and skills. However, tax remains a real thorn in the side for regional businesses, they want to see more Government resources to help businesses in the mid-market, including within HMRC.

“What’s more, Midlands businesses want long-term reform to streamline or lower business taxation, such as overhauling business rates, or cutting corporation tax.”

Despite the calls for reform, businesses in the region do not anticipate a reduction in corporation tax in the near future, with more than half (66%) believing the overall tax burden on their business will remain the same between now and 2025/26, with nearly a quarter (23%) anticipating that it will rise.

Bellingall added: “Encouragingly, when you place the Budget and Government support aside, the appetite for growth from Midlands businesses remains strong. Our survey shows the key to growth for many businesses over the next six months will include workforce improvements, business investment, and expanding internationally.

“There’s no doubt that trading conditions remain extremely difficult for Midlands businesses, with significant challenges remaining. However, with the right support from the Government mid-sized companies in the region will continue to be the driving force behind the UK’s economic recovery.”

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