Zarah ChoudharyNearly one in three firms surveyed (31%) believe they will need to make redundancies in the coming year, according to research by Evelyn Partners.
Furthermore, 30% of business owners polled say it was likely they would default on debt over the next 12 months.
The research, which was conducted among business owners with turnovers of £5m upwards, found that business owners believed their firms had the potential to be negatively impacted by a number of factors like the cost-of-living pressures impacting consumer demand (31%) increased taxation (26%) and the rising cost of raw materials and goods (23%).
Claire Burden, head of the advisory consulting team at Evelyn Partners, said: “The cumulative impact of inflation over recent years is still hitting businesses hard.
“Many industries have not been able to pass on the full extent of their cost increases and this has left some firms fighting for their survival.
“Business owners face a perfect storm as the lingering cost of living crisis has prompted consumers to tighten their spending.
“Our research shows that business owners were feeling the heat even before the Budget landed them with higher National Insurance costs.
“It’s deeply worrying that so many business owners are expecting to need to make redundancies over the year ahead.
“Cash reserves for many businesses are under pressure in the current environment and we can therefore expect to see some default on their debts.
“The recent Budget piled more pressure on businesses with the need to plan for rising costs in the coming years.
“Firms in labour-intensive sectors, such as hospitality, will be hit particularly hard by rising wage bills and some businesses will struggle to keep their heads above water.
“Business owners need to urgently scrutinise their operating models and plans to stay ahead in the challenging business environment.
“Businesses should prepare prudent forecasts and carefully consider their discretionary spending.”
