Some 72% of businesses currently preparing for an imminent recession, new data from Time Finance has revealed.
The latest survey has seen Time Finance investigate the consequences currently being felt by UK businesses as they grapple with rising energy and fuel costs, increased National Insurance and supply chain issues.
Of the businesses surveyed, one in three said they are now scaling back investment with 27% freezing wage increases, 18% halting recruitment and one in ten reducing their personnel.
Ed Rimmer (pictured), chief executive officer at Time Finance, said: “The majority of businesses we have spoken to as part of our latest survey are preparing for a recession this year.
“While this is understandable, it’s a worrying statistic. Reports of a looming recession can over inflate a sense of caution. It changes the way businesses look to the future; they scale back investment, halt recruitment and some even reduce their workforce. This can in-turn become a catalyst for a recession.
“Businesses are undoubtedly facing huge financial challenges as their costs increase across the board but how businesses respond to these challenges will have a direct impact on the health of our economy.
“Reckless spending will never make a successful business, but too much austerity can stunt growth. There is a compromise to be found and businesses need support to find that middle ground, to be able to balance the books while still moving forward.”
Time Finance’s survey also revealed that 65% of intermediaries predict a rise in business insolvencies as a result of rising costs.
Rimmer continued: “Insolvencies are a natural part of our economic life cycle; consumer trends and market conditions evolve constantly, and these changes have been much more rapid over the past two years. As these changes take place, some businesses adapt and some cease trading.
“That said, if the rate of insolvencies escalates then that simply means there has been insufficient support for those businesses.
“Our survey showed that one in five businesses said they were unable to remain competitive. This figure is too high and it is our industry’s job to support those viable businesses, to work with them to find the right funding solutions that help weather the storm while also facilitating growth.”
When asked which areas of business were most impacted by price hikes, materials and stock from suppliers ranked the highest at 64% closely followed by energy and utilities at 45%, and employment costs and National Insurance – both 36%.
