One fifth of UK businesses worried they won’t survive a recession – Evelyn Partners

New research from professional services firm Evelyn Partners found that more than one in five (22 per cent) UK businesses are not confident they will survive a recession in the next 12 months - with rate rises on the horizon, this confidence may drop further.

Evelyn Partners, which has offices across the South East and wider UK, collected feedback from 501 UK business owners with revenues of £5 million or more. Many business owners are taking, or are considering taking, steps such as refinancing their debt or postponing significant plans such as mergers and acquisitions.

Despite these precautions, there are persistent concerns regarding their financial stability.

Nearly half (47 per cent) of UK business owners said they may face bankruptcy in the coming months, with 15 per cent citing this as highly likely. Meanwhile, 52 per cent think it is possible they may default on their debt with, again, 15 per cent saying this is highly likely.

With this in mind – and with interest rates climbing – nearly a quarter (23 per cent) have already refinanced their debt, with another 43 per cent considering doing so. As borrowing costs also rise, 8 per cent of business owners plan to minimise their debt burden by ruling out the taking on of any additional debt.

Claire Burden, Partner, Advisory Consulting at Evelyn Partners, said: “The consensus is that the Bank of England has much further to go when it comes to rate rises. It’s encouraging to see a quarter of UK businesses have taken decisive measures to refinance their debt before rates rise further, those that are considering refinancing are urged to do so sooner rather than later.

“While many macro factors such as inflation, supply chain disruption or the cost of materials may be out of business owners’ hands, refinancing is a crucial card which businesses shouldn’t hesitate to play so they can strengthen their financial position during this challenging period for the UK economy.

“The most proactive business owners take advice early, whilst there are more options available. A qualified turnaround adviser will work to unlock cash from the business’ own balance sheet, cut costs and take whatever decisive action is necessary to save the business.”

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With so much in play that business owners are unable to control, many are taking proactive operational measures to help improve their finances. However, many have had to scale back their long-term goals in order to do so.

In this climate, it is perhaps unsurprising that businesses have scaled back their mergers and acquisitions activity. Just over one in five (21 per cent) have either postponed or pulled out of M&A activity, with nearly another half (48 per cent) considering it. The current average postponement time is more than two and a half years (2.66 years).

The story is similar when it comes to expansion, with many firms choosing to reduce their international footprint or postpone their future expansion intentions. Nearly half (48 per cent) of UK business owners anticipate they might have to withdraw from a key market due to the current macro challenges.

Claire Burden, Partner, Advisory Consulting at Evelyn Partners adds: “In periods like these, good advice, from advisers who understand your business and your businesses’ ambitions is critical.

“Business leaders are undoubtedly having to make tough decisions, postponing long-term goals to put their firm in the best financial condition to contend with current challenges. However, the best adviser should equip you with advice that can enable you to navigate the immediate obstacles, while also empowering and enabling you to remain focused on your long-term goals.”

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