Rising costs, interest rates and supply chain issues are pushing Yorkshire firms to consider restructuring action, new research suggests.
Grant Thornton's Business Outlook Tracker, which surveyed 50 firms last month, found 20% had already restructured with a further 40% planning similar moves. And 30% had already secured additional funding to deal with rising costs while a further 38% intended to.
The bi-monthly temperature test of mid-market Yorkshire businesses found lower levels of optimism among decision makers - dropping -42 percentage points since August. The sentiment was also said to be constraining future investment.
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Firms reported the biggest investment expectations drops across technology at -39 percentage points; plant, machinery and new buildings at -31 percentage points and employee rewards and benefits at -21 percentage points. Skills development and growth in international markets also suffered a -17 percentage points drop.
Meanwhile 68% of respondents said they had already invested in, or were planning to invest in, productivity, efficiency and automation measures. Overall confidence in the UK economy was found to have fallen sharply since the summer.
Andy Wood, Yorkshire managing partner at Grant Thornton UK LLP, said: "Businesses across the country are facing incredible cost pressures from all sides. The combination of input cost price increases, high energy costs and rising interest rates, are seeing businesses faced with increases from 5% to as much as 100% in some cases, when combined with the added strain of ongoing supply chain shortages in some areas. The severity of the environment is clear, with the majority of those surveyed either planning to restructure their operations, or already having done so.
"There isn’t one solution to fix these issues but there are always sensible steps that businesses can take to start to rebuild confidence. For example, reducing the businesses debt level to counter interest rate rises, reducing energy usage and looking for efficiencies in the face of energy cost rises, and considering alterative, cheaper suppliers.
"Many businesses are also reviewing their budgets for the next six to 12 months. It’s vital that these forward plans account for assumptions that may need to be made over this period, such as the impact of the end of energy bill relief, and rising interest costs. Businesses need to be proactive and take action where they can, rather than burying their heads in the sand – its these businesses who will work their way through this challenging environment, and emerge a more resilient, efficient organisation.”
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