Many businesses in the South East forced to restructure due to financial pressures
Inflation pressures, increasing interest rates, high energy prices and persistent supply chain challenges are all having a substantial impact on the financial viability of many firms. That's according to new data from top business and financial consultants Grant Thornton.
Nearly a quarter (24%) of mid-sized firms in the Thames Valley have re-organised their operations to meet these difficulties - with a further 37% planning to do so in the near future - according to the most recent Business Outlook Tracker from Grant Thornton. Due to the impact of growing prices and inflationary pressures, 29% of company executives in the area have already assessed their personnel options for potential cutbacks.
The proportion of firms in the Thames Valley that are enthusiastic about the UK economy's prospects has similarly dropped to only 27%.
According to the study, respondents that are confident about the financial condition of their businesses has considerably decreased to just 33%, a reduction of 23% from August. In order to deal with the market's rising expenses, many enterprises are being forced to acquire extra financing; 25% of them have already done so, and 35% plan to.
The finance crunch has also resulted in a sharp decline in investment forecasts across the majority of the areas tracked by the Tracker. The areas that had the largest declines from the previous round in August were recruiting (20%), environmental, social, and governance (ESG) (11%) and skills development (22%).
Practice Leader for Grant Thornton in the Thames Valley and Southampton, Norman Armstrong, said this about it all: “Businesses in the Thames Valley are facing a long list of cost pressures, ranging from input cost price increases and high energy costs to rising interest rates and supply chain bottlenecks. All of this means that many businesses are being faced with increases from 5% to as much as 100% in some cases."
“The severity of the current market landscape is causing many firms in the region to restructure their operations and review their headcount. While these pressures are going to be with us for some time, there are some steps that businesses should be looking at if they’re not already. This includes reducing their debt level to counter interest rate rises, minimising energy usage and looking for efficiencies wherever possible."
“Right now, many Thames Valley businesses will be looking ahead and reviewing their budgets for the next 6-12 months. These forward plans should account for factors that may spring up in 2023, such as the energy bill relief scheme ending, and rising interest costs. To make sure that they weather this storm of cost pressures, business leaders need to be agile and proactive, as it is these dynamic businesses that will fare the best and ultimately emerge as more resilient, efficient organisations.”
Main picture courtesy of Grant Thornton/Influential
READ MORE: Grant Thornton - Thames Valley businesses fear HMRC clampdown on IR35 compliance
READ MORE: Grant Thornton - Pandemic rattles the mid-market’s business confidence again
