New data shows mid-sized firms in Liverpool city region and across the North West are halting or delaying new investments amid rising energy and fuel costs due to conflict in the Middle East. Tony McDonough reports
Conflict between the US, Israel and Iran has caused energy and fuel prices to rise and this is impacting the investment decisions of North West businesses.
A new survey from accountancy firm BDO reveals 58% of mid-market firms in the region intend to halt or reduce investment as they wait for the volatile situation in the Middle East to stabilise.
Mid-sized businesses are those with annual revenues between £10m and £500m. The study shows that supply chain pressures including material delays and costs, stock shortages, and suppliers folding were a top concern for nearly a third of directors.
Companies in this range are a key segment of the regional and UK economy, contributing more than £1.8 trillion in revenues and accounting for one in three private sector jobs.
These pressures could leave companies making difficult decisions behind the scenes. Some are considering steps such as increasing customer costs (61%) and reducing headcount (36%) as a result.
However, a re-evaluation of priorities could also present growth opportunities, as companies seek to shore up their supply chains in light of ongoing pressures.
Almost half of business leaders in the region are looking to prioritise UK-based suppliers (45%), and a further 39% are considering onshoring or nearshoring, in a move that could provide a boost to North West manufacturing.
Angela Cross, regional managing partner at BDO in the North West, said: “The mid-market is vital to the North West and wider UK growth.
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“These companies are an overlooked engine of our economy, but instead of focusing their sights on expansion, they are struggling to absorb the latest economic shock in an uncertain global and political backdrop.
“Mounting pressures around energy, fuel costs and supply chains, which were issues affecting businesses even before the conflict in Iran, are only adding to the sustained feeling of uncertainty amongst regional business leaders.”