7 in 10 businesses preparing for 2022 recession
New data from Time Finance has revealed the scale of impact on UK SMEs as the cost of doing business continues to rise, with 72% of businesses currently preparing for an imminent recession.
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, Chief Executive Officer at Time Finance, commented: “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.
Ed 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%.
Ed added: “No sooner are businesses adjusting to one price hike that they face another. That can be overwhelming. It’s putting businesses back in survival mode, a position many hadn’t quite emerged from post lockdown. There’s no question that intervention is needed from the Government to prevent the cost of doing business, and the cost of living, from rising any further. In the meantime, our industry has a valuable role to play. Unlike traditional lending, alternative finance is a constant presence in good times and bad.”
Time Finance offers a range of products and services to support business growth, including Invoice Finance facilities ranging between £10,000 and £2.5million, Commercial Loans up to £500,000, Vehicle Finance and Asset Finance facilities, which recently saw the launch of a new Fast Track service to provide quick access to business critical assets.