Businesses in the North of England are more likely to face challenging financial headwinds over the next 12 months compared with their peers in the South. These headwinds include a potential fall in demand for their goods and services and barriers to raising their prices, according to research by Price Bailey, the Top 30 firm of accountants.
Price Bailey surveyed 750 Finance Directors who work for business with a turnover of £10m-100m, asking them about projected sales volumes and the prices of the goods and services they provide. The full report can be found here: https://www.pricebailey.co.uk/reports/uk-businesses-regional-divide-north-vs-south-financial-challenges/
The results revealed that more than twice as many businesses in the North of England (25%) expect their company’s volume of products and services sold to decrease over the year ahead compared to their peers in the South (12%).
Businesses in the North are also significantly less confident about increasing their prices than their counterparts in the South. 20 percent of businesses in the North expect to increase their prices significantly over the next 12 months compared to over a third (37%) of businesses in the South. This is despite UK inflation having fallen to 2.2% in August 2024, down from 6.7% a year earlier.
The new Government recently expanded the remit of the Low Pay Commission, which sets the NMW/NLW, to include taking account of the cost of living, rather than the emphasis being solely on labour market conditions. The NLW is expected to surge from £11.44 to £12.10 per hour by April 2025, a much greater increase than forecast in March.
Chand Chudasama, Partner in the Strategic Corporate Finance Team at Price Bailey, says: “As UK businesses continue to navigate difficult trading conditions and an evolving policy environment, the evidence suggests that their resilience levels are likely to vary according to where they are based.”
“In the upcoming Budget the Government should be conscious of regional and sector-based differences. These differences create fundamentally different economic outcomes to the lives of many people and the unintended consequences of broad changes to matters such as minimum and living wage and taxes can create systemic and irrevocable issues to both sectors and communities.”
He adds: “It is likely that businesses will seek to pass on wage rises to customers, which could feed through to inflation. Businesses in the pub and restaurant sectors have little room to absorb higher wage costs while borrowing costs stay relatively high. Many will be hoping for a rate cut but that could be delayed if statutory wage rises lead to stickier inflation.”
Businesses in the North facing greater challenges than peers in the South
4 November 2024
According to research by Price Bailey, twice as many businesses in the North expect sales volumes to fall over the next 12 months. Businesses in the North less confident about putting their prices up.
