Falling consumer spending a top concern for East Anglia businesses

A fall in consumer numbers and spending remains a top concern for East Anglia businesses, as companies brace themselves for a challenging first quarter of 2024, according to accountancy and business advisory firm, BDO.

BDO LLP’s latest bi-monthly Economic Engine survey of 500 mid-market businesses, revealed that 44% of regional businesses rank dwindling customer numbers and a reduction in spending as one of the biggest challenges facing their business over the next six months, as inflation and the high cost of living continue to hit customer pockets. The regional trend is also mirrored in the retail sector, with more than a third (37%) of retailers placing this as their number one concern.

It follows the latest BDO High Street Tracker that shows total like-for-like retail sales were negative in the last three months of 2023, the so-called ‘Golden Quarter’, pulled down by poor fashion sales as customers held back on their discretionary spend.

The survey of mid-sized businesses also showed that supply chain pressure, exacerbated by geopolitical events and staff and skills shortages, is still proving to be a thorn in the side of East Anglia businesses, with two-fifths (41%) of regional companies  admitting it will be their biggest challenge in the first half of 2024. Nearly one-fifth (19%) ranked difficulty accessing capital, such as bank loans and venture capital, as one of their top concerns.

Peter Harrup, Head of BDO in East Anglia, commented: “There are a number of enduring themes that continue to blight East Anglia businesses, centring predominantly around reduced customer spending, supply chains, and the cost of doing business.

“While these will remain a cause for concern in the coming months, in the longer-term it is the crippling costs of borrowing that will significantly hamper growth. Unsurprisingly, high monthly loan repayments are proving to be a significant concern for East Anglia businesses, with many calling on the Government for greater support.

“The Government should ensure it focuses on regulatory changes to tackle difficulty accessing capital, as well as providing greater financial incentives that are specifically targeted at mid-sized businesses, whose growth will play a key role in the overall economic recovery of the UK.”

Despite the ongoing pressures facing East Anglia businesses, almost all (97%) of regional companies said they had achieved forecasted growth in 2023. When asked what steps they intended to take to help drive growth in 2024, more than a quarter (28%) of regional businesses said they plan to invest in retraining and reskilling employees, with 19% intending to expand the physical footprint of their business. Nearly one-fifth (19%) have set their sights on investing in environmental, social, or governance measures.

Harrup added: “While the outlook is beginning to improve, with inflation heading in the right direction, there is still a huge amount of uncertainty on the horizon. 2024 will throw up its own challenges, in the form of potential political change and more economic volatility. As such, businesses in the region must clearly define their priorities in the coming months, while continuing to address ongoing challenges.”

For more information visit the BDO website.