According to the latest Business Distress Index from insolvency trade body R3, quite a lot. Their research revealed that at present, the main worries of business owners overall are the impact of a potential Brexit and auto-enrolment pensions.
23% of companies surveyed by R3 were concerned about the financial impact that a Brexit would have on their business, meaning that this worry shared the top spot with auto-enrolment pensions.
However, amongst larger firms employing 250 employees or more, concern over leaving the EU rose to the top of the pile, with 44% saying this is their greatest business worry.
Pension and Pay Problems
23% were worried about the impact of the auto-enrolment pension scheme on their business and 18% about the introduction of the National Living Wage, although concern about this rose among smaller businesses employing just 2 to 5 people, with 30% of business in this category identifying the National Living Wage as a concern.
A Taxing Time for Businesses
Among other concerns raised by respondents were quarterly tax reporting, a concern for 19%; the digitalisation of tax reporting (11%); the introduction of Universal Credit (7%); and the introduction of an Apprenticeship Levy (6%).
“Although the Brexit debate is grabbing the headlines, it’s important to remember that businesses face a plethora of other incoming regulatory and compliance challenges,” said Phillip Sykes, R3’s president.
“While Brexit might not come to pass, auto-enrolment pensions and the National Living Wage will definitely have to be dealt with by businesses. That said, as you would expect, the possibility of leaving the EU is playing on the minds of a significant number of business decision-makers. Uncertainty over such an important issue could well affect investment and planning decisions over the next few months.”
Business Growth and Distress
The survey also showed that while business growth appears to be slowing, business distress figures are at their second lowest since R3 began publishing their regular Business Distress Indexes in November 2010.
The figure for signs of UK business growth has fallen to its lowest level since July 2013, with 57% of British businesses reporting one sign of business growth in March, compared to 69% in December 2015.
Only 18% of UK businesses are showing at least one sign of distress – the second lowest this figure has been since the start of the Business Distress Index, and only marginally higher that December 2015’s record low of 17%. This figure reached a record high of 64% in March 2012.
“The latest survey suggests some companies are still doing well and are showing several signs of growth, but more companies are showing no signs of growth at all,” Commented Mr Sykes. “This is a deceleration rather than businesses going backwards. Some businesses may be consolidating following periods of rapid growth rather than running into real trouble. Levels of distress are still relatively low.”
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