High costs and access to capital stifle North West business growth
High costs and difficulty accessing capital continue to stifle growth for North West businesses, says accountancy and business advisory firm, BDO.
Its 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 (34%) admit that sourcing new capital from private and public sources is a top concern, with nearly one in three (31%) 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, North West businesses are calling on the Government to address ongoing issues around costs, skills and taxes.
The survey showed that a quarter of regional businesses (25%) would like to see more support to reduce borrowing costs and flexibility on repayment of government loans, with more than one-fifth (22%) calling for better access to private capital and government grants.
One in six North West businesses (16%) still believe the Government should offer greater support to resolve ongoing staff and skills shortages, including reforming the Apprenticeship Levy and placing greater focus on helping working parents.
Angela Cross, Head of BDO in the North West, 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, North West 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, and they want to see more government resources to help businesses in the mid-market, including within HMRC.
“What’s more, businesses across the North West 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 (53%) believing the overall tax burden on their business will remain the same between now and 2025/26, with more than a third (34%) anticipating that it will rise.
Cross added: “Encouragingly, when you place the Budget and government support aside, the appetite for growth from North West businesses remains strong. Our survey shows that the key to growth for many businesses over the next six months will include workforce improvements, business investment, and supply chain efficiencies.
“There’s no doubt that trading conditions remain extremely difficult for North West 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.”
