High fuel costs are a bigger burden to businesses than low consumer spending, according to new research.
Whilst Midlands businesses are experiencing significantly fewer signs of distress and funding difficulties, the rising cost of petrol and diesel is proving to be the major obstacle to growth, according to the latest Business Distress Index by insolvency trade body R3.
Researchers found that of more than 500 business owners and financial directors, a total of 34 cited increased fuel costs as the biggest problem they face – compared to 32 per cent who said reduced consumer spending was their main problem.
Only five per cent of respondents identified an inability to secure further credit or a bank loan as a key problem.
Elsewhere, the survey found that eight per cent of respondents were reporting regular use of their maximum overdraft facility in the past quarter, down from 18 per cent in the last quarter of 2012.
R3’s Midland chairman Richard Philpott, a partner at KPMG in the region, said: “Concerns over utility bills and revenue show that businesses still feel they are being squeezed on both sides, making it hard to cut costs.
“However, with the relatively low number of respondents deeply concerned about securing credit or a bank loan, access to funding appears to be dissipating as an issue. This may be an indication that businesses are deleveraging where possible and becoming accustomed to reduced credit availability. Unfortunately, this can only be viewed as a feeder for economic stagnation.”
Mr Philpott’s comments are backed up by R3’s Midlands growth figures, which show that across the region the number of businesses reporting growth indicators has fallen since November 2012 from 57 per cent to 51 per cent.
Businesses confirming investment in new equipment has also fallen, from 41 per cent last November to 21 per cent in the latest survey.