Nearly one in three business owners plan redundancies as debt defaults loom
Newly published research* taking the temperature of 500 business owners has revealed that nearly one in three firms surveyed** (31%) believe they’ll need to embark on a wave of redundancies in the coming year. Furthermore, 30% of business owners polled say it’s likely they’ll default on debt over the next 12 months.
The research, which was conducted for professional services group Evelyn Partners amongst UK business owners with turnovers of £5m upwards, is released at a time when many businesses are reeling from announcements made at Rachel Reeves’ maiden Budget. The chancellor’s statement announced a significant rise in employer National Insurance contributions, a hike in the minimum wage and came hot on the heels of legislation which will usher in more demanding employee rights that will add to businesses’ cost bases for the years ahead.
Evelyn Partners’ research* – carried out in the run-up to the Budget – found that business owners believed their firms had the potential to be negatively impacted by a number of factors:
- Cost of living pressures impacting consumer demand (31% of those surveyed)
- Increased taxation (26% of those surveyed)
- Increase in cost of raw materials and goods (23% of those surveyed)
Claire Burden, head of the advisory consulting team at Evelyn Partners commented: “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.”
Question asked by the research*: What factors, if any, do you think have the potential to most negatively impact your business?
Cost of living, impacting customer demand | 31% |
Increased taxation | 26% |
Increased competition | 23% |
Increase in cost of raw materials & goods | 23% |
Wage inflation / employee requests for increased wages | 16% |
Heightened cyber threat | 15% |
Labour shortages | 15% |
Working capital challenges | 14% |
Managing global economic change | 19% |
Global political uncertainty | 18% |
Artificial intelligence | 14% |
Managing flexible employee working expectations | 14% |
Internal threats / fraud | 13% |
Funding capital challenges | 12% |
Red tape – increase in regulations | 12% |
*The research was conducted by Censuswide, among a sample of 500 18+ UK Business Owners (Businesses with a turnover of £5m+). The data was collected between 18.09.2024-02.10.2024. Censuswide abides by and employs members of the Market Research Society and follows the MRS code of conduct and ESOMAR principles. Censuswide is also a member of the British Polling Council.
**Combines ‘Very likely’ and ‘Somewhat likely’
