According to new research from Grant Thornton UK LLP, a combination of inflationary pressures, rising interest rates, high energy costs, and ongoing supply chain issues are significantly impacting the financial viability of many businesses.
The leading business and financial adviser’s latest Business Outlook Tracker* found that more than half (51%) of mid-sized businesses in Wales have restructured their operations to face these challenges, with a further 39% having plans to do so.
41% of business leaders in the region have already reviewed their headcount due to the impact of rising costs and inflationary pressures.
Many businesses are having to secure additional finance to work through the escalating costs facing the market, with 47% already having secured further funding and an additional 47% planning to do so.
Investment in the region looks to be being directed to areas that will have the most impact on reducing costs. More than three quarters (88%) of respondents have already invested, or are planning to invest, in productivity, efficiency and automation.
Alistair Wardell, partner at Grant Thornton UK LLP and head of its restructuring team in the South of England and Wales, said:
“Businesses across Wales are facing incredible cost pressures from all sides. Thanks to the combination of input cost price increases, high energy costs, rising interest rates, and ongoing supply chain shortages, businesses are facing increases ranging from 5% up to as much as 100%. The severity of these challenges means that almost all the businesses we surveyed said that they were either planning to restructure their operations or had already 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. Practical examples of this include reducing debt levels to counter interest rate rises, reducing energy usage, looking for efficiencies, and considering alternative, cheaper suppliers.
“Many Welsh business leaders are currently reviewing their budgets for the next 6-12 months. During this forward planning, it’s vital that potentially looming factors such as the end of the energy bill relief scheme and rising interest costs are accounted for. In general, businesses need to be proactive and take action where they can, rather than waiting until it’s too late – as it’s these businesses who will better weather the current market challenges and emerge as more resilient, efficient organisations.”