Nine in 10 mid-sized firms based in the South West shrugged off the national economic gloom last year to achieve their forecasted growth, according to a new survey.
Now nearly a third plan to launch new products or services to continue to expand this year, despite challenges linked to the ongoing cost of living crisis. Some 30% say they plan to invest in new efficiencies and 30% intend to invest in environmental, social or governance measures.
The upbeat picture emerges from the latest Economic Engine report from national accountancy group BDO, which is based on a bi-monthly survey of 500 mid-market businesses.
While firms taking part on the whole enjoyed a good 2023, challenges remain, mainly around consumer spending – although ongoing supply chain issues have also continued into this year.
The survey results show a fall in consumer numbers and spending remains a top concern for South West businesses.
Almost two-fifths (39%) of regional businesses said this was one of the biggest challenges over the next six months, as inflation and the high cost of living continue to hit customer pockets, with 37% of retailers placing this as their number one concern.
This follows the latest BDO High Street Tracker survey that showed total like-for-like retail sales were negative in the last three months of 2023, the so-called pre-Christmas ‘golden quarter’, pulled down by poor fashion sales as customers held back on their discretionary spend.
Meanwhile, supply chain pressure, exacerbated by geopolitical events and staff and skills shortages, was still proving a thorn in the side of South West businesses, with 48% naming it their biggest challenge in the first half of this year.
A third ranked increases in commercial rent as one of their top concerns.
BDO South West managing partner David Brookes, pictured, said: “There are a number of enduring themes that continue to blight South West businesses, centring predominantly around reduced customer spending, supply chains and the cost of doing business.
“While these will remain a cause for concern in the coming months, in the longer term it is the crippling costs of borrowing that will significantly hamper growth.
“Unsurprisingly, high monthly loan repayments and fees are proving to be a significant concern for South West businesses, with many calling on the government for greater support.”
He said ministers should ensure they focus on regulatory changes to tackle difficulty accessing capital as well as providing greater financial incentives specifically targeted at mid-sized businesses, whose growth, he said, would play a key role in the overall economic recovery of the UK.
