71% of UK businesses more profitable now than pre-pandemic
EQ Riskfactor, a leading global provider of risk management software for the commercial finance market (part of Equiniti Group), has today launched a new international report. The Global Business Borrower Report, provides a detailed snapshot of current business sentiment in five key markets: the UK, US, France, Germany and the Netherlands.
The report found that the UK leads the way when it comes to optimism and predictions of profitability, but the picture also looks broadly positive in the US, France and Germany. 71% of UK businesses say they are more profitable today than they were before the pandemic and 90% of UK businesses say they are optimistic about their business and growth during 2022/ 2023, including 47% who are extremely optimistic. In total across all five markets a clear majority (80%) of all businesses surveyed say they are optimistic about their business and growth during 2022/2023, including 28% who say they are extremely optimistic.
The US was the most confident market after the UK, with 85% of businesses there describing themselves as optimistic, followed by Germany (80%), France (76%), and the Netherlands (69%). Nearly two-thirds (65%) of all businesses surveyed also say they are more profitable today than they were before the pandemic, with the US at 68%, France at 69%, Germany at 67%, and the Netherlands at 43%.
Aaron Hughes, CEO Equiniti Riskfactor, commented: “Despite concerns about the direction of the economy and a potential recession, it’s encouraging to see that UK businesses still have a positive outlook. The businesses that have managed to stay afloat through the last few tough years are typically the most resilient. Many of these have also had to undergo some degree of cost-cutting in the last two years, as they were forced to right-size their cost base. This cost-cutting has put many companies in a strong position to profit from the reopening of the economy, but they will still have to face the substantial challenges that lie ahead.”
Despite this optimism there are certainly some major concerns on the horizon. In the UK the most important challenge cited by businesses is Brexit (chosen by 20% of respondents), with 48% of UK businesses putting it in their top three concerns. But concerns about rising energy bills and inflation were close behind (17%) and supply chain disruption was cited by 16% of businesses.
Rising energy bills and inflation was a key concern across respondents. Almost half (49%) of all businesses surveyed listed it in their top three worries and this figure (49%) was consistent across UK businesses too. Similarly, 45% of all businesses put supply chain disruption in their top three concerns, rising to 49% in the UK.
Staff procurement was less of a concern in the UK, cited by only 7% of businesses as their biggest concern. Difficulties with the labour market were highlighted by more businesses in the US as a top concern (9%), but this was still behind Germany (18%), the Netherlands (14%), and France (11%).
Aaron Hughes concluded: “There are certainly major challenges on the horizon, even for these resilient businesses. While concerns about the labour market have been loudly publicised, particularly in the US, it looks like inflation and rising energy prices will be the major challenge for UK businesses.
“With the northern hemisphere moving into winter soon, pushing up energy use, and little sign of any end to the conflict in Ukraine, energy costs could soon become an even more major concern. The UK government has announced a new ‘Energy Price Guarantee’, starting in October and aimed at supporting businesses with the costs of their energy bills, which could provide some relief. This is only a six-month scheme though, and without adequate planning and further support many UK companies could be in for a long and difficult winter.”
Download the full report here.