INFLATION, rising interest rates, high energy costs and ongoing supply chain issues are significantly impacting the financial viability of many businesses.
Only a third of mid-sized businesses across the East of England have already restructured in light of the challenging economic times, although one in four yet to act have plans to do so.
But jobs may be at risk, according to the latest Business Outlook Tracker research from business advisory specialist Grant Thornton, with 62 per cent of companies either looking to review their headcount or having already done so.
Many businesses in the region are having to secure additional finance to work through the escalating costs facing the market, with 30% already having secured extra funding and 34% planning to do so. However, the survey says that optimism levels regarding the funding position of businesses dropped to 46%, which is a fall of 28% in just three months since August.
As a result, investment plans are being put on hold, in particular in plant, machinery and property (-22%), employee wellbeing (-22%) and employee rewards and benefits (-16%).
However, firms are eying investment to produce savings, in particular in productivity, efficiency and automation.
Grant Thornton says that outside economic factors are pushing cost increases of anywhere from 5% to 100%. It is advising employers to reduce debt levels to counter the interest rate rises, cut their energy usage, seek efficiencies and cheaper suppliers.
James Brown pictured left, partner and practice leader in the East of England, said: “The severity of the situation is causing many firms to restructure their operations and review their headcount. While these problems are going to be with us for some time, there are steps that businesses can explore in order to rebuild confidence.
“Right now, many businesses will be looking ahead and reviewing their budgets for the next six to 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. Thankfully, I know that this region is full of proactive, agile and dynamic businesses that will take on the challenges and emerge as more resilient, efficient organisations.”
