Truro firm warns UK businesses face a ‘cycle of despair’

Nearly seven in ten business leaders now say economic uncertainty is the single thing they worry about most. And new research from a firm with an office in Truro suggests few of them expect things to get easier any time soon.

A gloomy outlook for the year ahead

The findings come from the latest quarterly Azets Barometer, a survey of 442 senior decision-makers carried out by Azets, a UK top 10 accountancy and business advisory firm with offices across the South West including Truro.

Economic uncertainty topped the list of concerns for the next year, named by 69% of those asked.

Optimism was thin on the ground. Just 43% felt positive about the UK’s economic outlook over the next 12 months. More, 45%, were pessimistic. The remaining 12% sat on the fence.

Where the pressure is being felt

Businesses pointed to the issues hitting them hardest. 48% reported higher labour costs. 46% said profit margins had been squeezed. And 38% flagged pressure on cashflow as a main concern.

The strain is already shaping decisions. 70% of businesses expected to freeze or cut headcount. 82% expected to keep borrowing or borrow more.

‘A cycle of despair’

Peter Gallanagh, UK Chief Executive at Azets, did not soften the picture.

“Businesses in the UK are on the cusp of a cycle of despair. They can’t invest and grow because of the economic climate, and the economy won’t grow at the pace we need it to because businesses can’t invest and grow.”

He called on government to act.

“The government needs to take the chains off companies in the UK and give them the fuel they need to go for growth. With a change of prime minister taking place, this is the perfect time to look at the cost issues facing businesses and find ways the government can reduce the burden on firms so they can return to what they do best: powering the economy.”

📷Peter Gallanagh, Azets UK CEO.

What keeps a business standing

The research also asked what helps firms weather the storm. The answers leaned on a company’s own strengths rather than outside rescue. The top three factors named were people and talent, operational agility, and leadership and decision-making capability.

“British businesses, especially SMEs, have always known how and when to pivot and evolve in the face of adversity,” Peter said. “Through pandemics, wars and economic crises they’ve shown the agility and the foresight to adapt to challenges and come out leaner and more efficient.”

Looking abroad for backing

With funding harder to come by, some firms are widening their search. 41% said they would be open to taking investment from a business based outside the UK.

“There’s no doubt that it has got harder and more expensive for businesses to access funding, whether that’s for growth or rescue,” Peter said. “With this in mind, it’s no surprise that the best of British are looking abroad for support, and given the track record these businesses have of innovation and success it’s clear there’s a willing supply from foreign shores.”