International growth at risk for UK mid-sized businesses
International growth at risk for UK mid-sized businesses
- Barriers to exporting overseas is top challenge for mid-sized businesses over next six months
- Higher workforce costs are also among concerns for business leaders in the mid-market
- In face of challenges, businesses are sourcing new capital and prioritising investment in tech and AI to help drive expansion plans
- Mid-market calls on Government and regulators to make it easier to recruit, source capital or access new trade agreements
Barriers to international expansion and rising workforce costs are among the top pressures facing UK businesses over the next six months, according to BDO’s latest survey of 500 mid-sized business leaders with turnovers between £10m-£300m.
Exporting products or services overseas has become the top challenge facing one in three mid-sized businesses (34%) due to disruption from delayed deliveries and stock shortages. This rises to almost half (46%) among mid-sized manufacturers and could be compounded by the prospect of international trade tariffs.
Almost half (46%) say they need better support from the Government to begin or continue exporting abroad. This includes broadening access to UK Export Finance support to the mid-market, new Free Trade Agreements and simpler customs rules to aid the export of products or services overseas.
Rising workforce costs such as National Insurance contributions (NICs) and the Living Wage, which both increase next month, are also a significant worry for more than one in four (26%).
As nine in ten mid-sized companies (91%) brace for further cost increases in 2025, over a quarter (28%) will have to delay hiring, freeze recruitment or scale back future plans to hire new staff to mitigate higher costs. This is particularly significant with previous research by BDO showing mid-sized businesses support around one in three private sector jobs in the UK.
Mid-sized businesses say incentives would be useful to help upskill or recruit more staff whilst they address skills shortages and workforce costs rise. Over a quarter (26%) recommend making the Growth and Skills Levy accessible to career changers.
Despite these challenges, businesses remain resilient and are still striving to grow. One in three (33%) are investing in new technologies, such as AI and automation, to enhance efficiencies; and a further 27% are sourcing new capital to fund expansion.
Richard Austin, Partner at BDO, commented: "Five years on from the start of the Covid-19 pandemic, the ways in which many c-suite leaders run their businesses have changed, yet uncertainty and barriers to exporting overseas remains a key challenge for management teams.
“Mid-market companies are the engine room of the UK economy – they support one in three UK private sector jobs. Creating the right operating environment for them to deliver growth must be high on the agenda for Government."
ENDS
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BDO LLP operates in 18 offices across the UK, employing 8,000 people. It has UK revenues of £1bn.It provides Audit, Tax, Deals, and Consulting, Risk & Outsourcing services predominantly to mid-sized, entrepreneurially-spirited, high-growth businesses that are driving growth in the UK economy. BDO calls this segment of the market the UK’s economic engine.
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