Midlands businesses are navigating challenging economic landscapes as they prepare their growth strategies for 2025. Key concerns identified in a recent survey by accountancy and business advisory firm BDO LLP include supply chain pressures and rising operational costs, which are significantly impacting mid-sized firms in the region.
In the survey, which examined 500 mid-sized businesses with turnovers between £10 million and £300 million, responses indicated that 20% of these companies consider supply chain challenges a pressing issue. Delays in material supply are causing disruptions for many firms. Furthermore, nearly a quarter of the respondents (24%) have identified rising costs associated with operations—including energy bills and investments in new technologies such as artificial intelligence (AI)—as another critical concern, despite a general easing of inflationary pressures.
Kyla Bellingall, regional managing partner at BDO in the Midlands, commented on the economic climate, saying, “Political and economic headwinds have continued to create a difficult trading environment for many regional businesses in 2024.” She added that with inflation stabilising and a reduction in interest rates, businesses are shifting focus towards overcoming these hurdles and identifying opportunities for growth.
This outlook has led many businesses to reevaluate their staffing strategies, with 29% planning to hire more non-permanent staff and apprentices to mitigate the impact of increased labour costs. Additionally, 31% of firms reported that they would require enhanced financial support to manage additional overheads. The survey also highlighted that over 11% of businesses are aiming to establish specific roles to facilitate a greater adoption of technology, targeting genuine productivity improvements.
Despite such pressures, the survey revealed a resilient spirit among Midlands businesses, with 49% expressing confidence that they are in a stronger position compared to the onset of the COVID-19 pandemic five years ago. In fact, 36% of regional firms plan to invest between £3 million and £5.5 million within the next two to five years to support their scaling objectives.
Bellingall noted, “There’s no doubt that the Autumn Budget has added an additional layer of pressure for many businesses; however, what it has done is provide a degree of certainty about how the UK economy will look in the coming years.” In light of these dynamics, businesses are primed to invest in technology adoption and staff training, particularly in the fields of artificial intelligence and automation. Alongside technological improvements, firms are prioritising product innovation and efforts to enhance the resilience of their supply chains.
Bellingall emphasised the necessity for governmental support, stating, “One thing is very clear, central government needs to throw its weight behind mid-sized businesses – the engine of our regional economy – if these businesses are going to succeed, and that can only be achieved by introducing policy and taxation that supports their strategic ambitions.” As Midlands firms look ahead, navigating these trends in AI automation and other technologies will be pivotal in shaping their future growth and stability within the market.
Source: Noah Wire Services