More than a third of business in the West of England are being forced to restructure operations in a bid to cope with mounting cost pressures, new research has revealed.
A combination of rising inflation, increased interest rates, high energy costs and ongoing supply chain issues are significantly impacting the financial viability of many firms in the region, according to a new report from Grant Thornton UK.
The Business Outlook Tracker found over one third (34%) of mid-sized businesses in the South West have restructured in the hope of overcoming economic challenges, with a further 46% planning to do so. It also found 42% of business leaders in the region had reviewed their headcount due to the same pressures.
Jonathan Riley, practice leader for Grant Thornton UK in the South West, said: “Businesses in the South West are facing incredible cost pressures, with a perfect storm of challenges coming at them from all sides. The severity of the situation is illustrated by the fact that business leaders are currently restructuring their operations and reviewing their headcounts."
Many businesses are having to secure extra finance to work through the escalating costs facing the market, according to the tracker, with 34% already having secured further funding and 42% planning to do so.
The strain on funding has also led to a drop in investment expectations across most areas monitored by the tracker. The most significant falls were seen in skills development, employee wellbeing and plant, machinery and new buildings. There was also a decline in the number of businesses planning to increase investment in international markets.
According to Grant Thornton, companies that are investing are directing this into areas that will have the most impact on reducing costs such as productivity, efficiency and automation.
“The recent political and economic twists and turns have clearly been affecting the business landscape and the ability of companies to plan ahead," added Mr Riley.
"We hope that in the pending full Autumn Statement on November 17 we will see some real efforts from the chancellor, and the new prime minister, to stabilise the financial markets and deliver on the South West’s levelling up requirements."
READ NEXT
- Interest rate rise 'further headache' for business, says British Chamber of Commerce
- With interest rates at 3% and fears of longest recession in 100 years, PM urged to get business basics right
- The number of businesses going bust is soaring as costs rocket
South West firms concerned about economy - but positive about own prospects
