Nearly 40% of medium-sized businesses in the North East say that supply chain issues are the biggest threat to their success in the next six months.
This was followed by increased energy costs, shared by a third of companies, as their biggest concern, according to new research from BDO, an accountancy and business advisory firm.
A bi-monthly Rethinking the Economy survey of 500 leaders from medium-sized businesses found that a third of businesses in the sector are currently planning to grow their workforce but are struggling to find talent with the right skills.
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The research found that 20% of companies in the sector plan to raise wages by 9% or more in line with current inflation rates to support employees with a cost of living crisis, and 53% of companies in the North East are planning to raise wages. Planning from 4-8%.
In addition to a change in pay, 63% of businesses in the Northeast will provide other benefits to help employees, such as shopping vouchers, childcare assistance, free travel or on-the-job meals.
Michael Stallard, partner at BDO in the North East, said: “Companies are facing immense challenges and this is putting real pressure on finances. Despite this, the workforce continues to grow and with pay increases or other benefits Have a clear ambition to support their teams.”
Companies in the sector are also looking to innovation to counter the effects of inflation with 40% saying they will launch new products or services or introduce new systems to increase efficiency and reduce costs in their business . Unfortunately, 47% of businesses also shared that they are using overdraft facilities as a response to current inflation challenges.
Michael said: “It is extremely encouraging – but not surprising given the entrepreneurial spirit in the region – that businesses here are responding to current rates of inflation by rethinking their operations and innovation.
“However, companies are also relying on overdrafts and incurring more debt, so it should not be underestimated the level of challenges facing businesses.”
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