Cost of living could have worse impact on business than Covid 

The accountancy and business advisory firm’s bi-monthly survey of 500 leaders of medium-sized businesses also revealed that 18% of businesses believe the cost-of-living crisis and rising inflation has or will have a more negative impact on their companies than Covid-19. 

Meanwhile, businesses are battling with the impacts on recruitment and retention efforts resulting from the rise in National Insurance, which came into effect in April. 33% have raised wages in a move to absorb the increased contributions facing their employees, while 31% of firms are struggling to pay the higher cost to them as employers. 

In response to rising costs, 27% of companies are increasing prices for end consumers as a result of supply chain disruption, while 19% have paused investment in the business completely. The same number are unable to prioritise research and development for new products and services. 

This comes despite the government encouraging businesses to innovate through this period of economic downturn. 

Commenting on the survey’s findings, BDO partner Ed Dwan, said: “This is a deeply troubling picture for the UK’s mid-sized businesses, who have spent over two years since the start of the pandemic operating in survival mode. 

"Now, mounting inflation and the cost-of-living crisis is once again preventing them from prioritising long-term recovery, especially by putting a pause on much-needed investment.

“For many, the rise in National Insurance contributions has been a tipping point – resulting in an increase in salaries that could well exacerbate inflation and the pressures facing businesses right now.

“These businesses are the engine of the UK’s economy and without the right support and policies from government, their long-term growth is at risk.”