Mid size firms stifled by export barriers and rising costs
Increasing workforce costs and export barriers are threatening the growth of UK mid-size firms.
According to new research from BDO, which surveyed 500 business leaders representing companies with turnovers between £10m and £300m, the sector cited international trade challenges as the top concern over the next six months.
Over a third, 34 per cent, of these firms reported difficulties in exporting as their biggest hurdle, driven by delayed deliveries and shortages.
According to a poll by banking firm HSBC, this sentiment has only been heightened by potential new trade tariffs, which led 39 per cent of UK businesses to hike prices.
Among manufacturers, this rises to almost half (46 per cent) of participants, underlying growing obstacles for UK firms looking to expand overseas.
Nearly half of respondents also said they need stronger government support to navigate international trade, including broader access to UK export finance, new free trade agreements, and streamlined customs rules.
Without the implementation of these measures, many firms face increasing difficulty in competing on the global stage.
Rising workforce costs are also placing significant strains on UK businesses.
With increases in national insurance contributions and living wage set to take effect in the next month, 26 per cent of mid size businesses are concerned about the financial strain.
According to a recent survey from KPMG and recruitment and employment confederation (REC), London firms are bracing for the impact of these changes, as recruitment activity continues to shortfall.
As an result, 28 per cent plan to delay hiring, freeze recruitment, or scale back future workforce expansion.
Given that mid-sized businesses support around one in three private sector jobs in the UK, these constraints could have wider economic implications.
Despite these challenges, mid-size businesses remain focused on growth.
With one in three investing in new technologies amid the AI boom, 27 per cent are actively sourcing new capital to fund expansion.
Yet, business leaders argue that greater incentives are necessary to support skills development.
Richard Austin, partner at BDO, said: “Five years on from the start of the Covid-19 pandemic, mid-market businesses continue to face uncertainty, particularly around international trade.”
“These companies are the engine room of the UK economy, supporting one in three private sector jobs”, he added. “Ensuring they have the right conditions to grow must be a priority for the government.”