- Fears suppliers could go bust are nearing pandemic-era highs, with Middle East turmoil set to pile on pressure
Alarm bells are ringing across Britain’s small business sector as rising costs and fears of supplier failures push firms to the edge.
New data from ACCA and IMA’s Global Economic Conditions Survey reveals confidence among UK SMEs is stuck near record lows, with many businesses struggling to stay afloat.
The survey, which was conducted in the early days of the Iran War, shows the cash squeeze is intensifying fast. Reports of businesses not being paid on time have surged to their highest level in nearly 14 years – a stark warning sign not seen since the fallout of the eurozone crisis.
At the same time, fears that suppliers could go bust are nearing pandemic-era highs, raising the spectre of widespread disruption across already fragile supply chains. Concerns about customers going under are also rising.
And the pressure isn’t easing: almost 8 in 10 businesses say costs are still rising, leaving many fighting for survival.
There are faint glimmers of hope though. The improvement in the forward-looking New Orders Index pointed to signs of recovery in the UK economy. ACCA experts warn the situation remains tough.
Lloyd Powell, head of ACCA Cymru/Wales, said: “Businesses are facing a difficult trading environment, with global tensions over the Middle East and inflation making any quick recovery unlikely for challenging trading conditions in the coming months.
“This quarter’s sharp rise in concerns about supply chain reliability and the ability to secure prompt payment demonstrate the need for the government to boost confidence and swiftly provide the implementation road map for their recently announced late payment new powers for the Small Business Commissioner.”
Fresh shocks from the Middle East conflict, including rising oil prices, threaten to wipe out any fragile recovery.
ACCA chief economist Jonathan Ashworth said: “The global economy was in relatively decent shape before recent developments in the Middle East, amid the ongoing global AI boom, favourable global financial conditions and fiscal easing in a number of major economies. Nevertheless, the longer energy and other commodity prices remain high and uncertainty elevated, the greater the downside risks for global and UK growth.
“Before recent events in the Middle East, additional rate cuts from the Bank of England looked set to provide a helping hand for the UK economy this year, but that looks unlikely at present. The risk is more likely in the direction of a rate hike”.