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30/04/2013

Rising cost of fuel biggest obstacle to growth

 

Nearly a third (32%) of businesses state that the rising cost of fuel and utilities is the biggest problem they face. This is followed by reduced consumer spending, identified by 26% of respondents. Insolvency trade body R3 surveyed over 500 businesses, of which only 5% identified an inability to secure further credit or a bank loan as a main problem.
Outgoing R3 President Lee Manning comments:
“Concerns over utility bills and revenue show that businesses still feel they are being squeezed on both sides. Businesses depend on utilities to operate, making it hard to cut costs. With consumers unwilling to spend, businesses will be increasingly concerned about their margin. At least access to credit has slipped away as an issue, perhaps businesses are deleveraging where possible and getting used to life with reduced access to credit.”
This is reinforced by the fact the number of businesses reporting that they regularly used their maximum overdraft fell from 20% in November to 10% in the latest survey. In fact the number of businesses reporting signs of financial distress overall has fallen significantly in the last year, from 64% in March 2012 to 40%.

 

However, the number of businesses reporting growth indicators has fallen since November 2012 from 51% to 47%. For example, businesses reporting investment in new equipment fell from 33% in November to 20% in the latest survey.
Lee Manning says: “Business growth is still very hesitant. Although so few businesses said that access to bank lending was a problem, this could also indicate that many businesses are not even bothering to go to banks for funding. While things aren’t getting worse, they aren’t improving either.”
“Decreasing numbers of businesses ‘in distress’ will not automatically lead to economic growth. Recent data from Experian identified the growth of ‘gazelle’ businesses, those mid-sized businesses with significant growth over the past three years, but these cases are still relatively small. Their numbers will have to increase to overtake the zombie numbers which we estimate are still much higher.”

R3’s April 2013 Business Distress Index found that all key indicators of business distress fell from November 2012, and are significantly down on March 2012’s Business Distress Index:
• The number of businesses reporting redundancies fell from 10% in November 2012 to 5% in the latest survey– the equivalent of 81,000 businesses
• The number of businesses reporting decreasing profits fell from 33% in November to 27% in the latest survey
• Only 12% of businesses reported seeing a fall in market share in the latest survey, compared to 17% in November
• The number of businesses reporting declining sales fell from 31% in November to 20% in the latest survey

For further information:
Will Black, R3 Communications Manager
t: 020 7566 4215 m: 07917 422 485 e: will.black@r3.org.uk

Methodology
BDRC Continental conducted 501 telephone interviews with small, medium and large business owners and Financial Directors between 4th-14th March 2013. Strict quotas are set by size, region and sector and the data weighted to be representative of the ONS profile of UK businesses, each with an annual turnover above £50,000. The respondent in each case is a senior financial decision maker.

Notes to editors:
– R3 is the trade body for Insolvency Professionals, and is made up of 97% of the UK’s Insolvency Practitioners.
– R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by one of nine recognised professional bodies.
– R3 stands for ‘Rescue, Recovery, and Renewal’ and is also known as the Association of Business Recovery Professionals. Website www.r3.org.uk

 

 

 


R3 Press Office

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see www.r3.org.uk for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
     
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.