Partner Article

Revenues recover, but challenges remain for North East Businesses

• The majority of North East businesses have returned to pre-pandemic revenues
• Supply chain issues are the biggest threat to business growth in the region in the next three months
• North East businesses are digging deep to support employees, with 42% of companies increasing wages ahead of inflation.

The majority of North East mid-sized businesses have returned to pre-pandemic revenues, two years after seeing sales fall.

According to new research from accountancy and business advisory firm BDO LLP, nearly a third of regional businesses are generating the same level as they were before COVID-19, with more than half increasing revenue.

Despite the financial recovery, the region still faces considerable challenges, with the biggest threat to growth over the next three months being supply chain issues (26%). The increasing cost of goods and services, and the ongoing impacts of Brexit, are also adding significant pressure to businesses. As a result, ongoing issues are preventing companies from prioritising key operational activities, with one in five North East businesses unable to support worker wellbeing and more than a quarter struggling to carry out research and development for new products and services.

Michael Stallard, partner in the North East, commented: “Given the grit and determination demonstrated by North East businesses over the course of the last two years, it comes as no surprise that a significant proportion of regional businesses have returned to pre-pandemic revenues.

“However, the fact remains that the economic landscape is still fraught with challenges and the fall-out from the pandemic and even Brexit continue to adversely impact businesses. As such, the culmination of these challenges is leading many to relook at finance options, raise prices, overhaul their supply chain and pause investment in the business.”

Despite this, businesses in the North East continue to put employees front and centre, with many implementing measures to support staff with the rising cost of living. According to the survey, 42% of regional businesses have increased wages ahead of inflation, while offering staff other benefits, such as free childcare, subsidised travel to work, and free meals while in the office.

Stallard added: “With staff shortages and skills having the most negative impact on North East businesses since March 2020, the task of retaining talent has never been more pronounced. While prioritising issues, such as employee wellbeing, is proving difficult in the current climate, regional businesses are doing everything they can to support employees – whether that’s through wage rises in-line or above inflation, or one-off bonuses - as the cost of living crisis continues to bite.”

This was posted in Bdaily's Members' News section by Ian Jones .