The potential implications of the UK leaving the EU is currently the leading financial concern for North East business owners – but it’s far from the only issue that’s on their minds.
When prompted by insolvency trade body R3 about a number of possible business concerns, over a fifth (21%) of regional businesses said they were worried that ‘Brexit’ would have a significant financial impact on them.
But issues surrounding the arrival of the National Living Wage (20%) and the challenges presented by the introduction of auto-enrolment pensions (17%) were found to be causing almost as much anxiety as a possible EU exit.
Other business worries recorded by R3 included the introduction of quarterly tax reporting (16%) and the digitalisation of tax reporting (10%), while the introduction of the Apprenticeship Levy (2%) and Universal Credit (1%) prompted much less concern.
Neil Harrold, North East chair of insolvency trade body R3 and a partner with Hay & Kilner Solicitors, says: “Although the Brexit debate is grabbing the news headlines at the moment, it’s important to remember that businesses face a plethora of other incoming regulatory and compliance challenges.
“Almost as many North East businesses are worried about more prosaic, everyday matters than are worried about Brexit, and while Brexit might not come to pass, issues such auto-enrolment pensions and the National Living Wage will definitely have to be dealt with by businesses.
“That said, you would expect the possibility of leaving the EU is playing on the minds of a significant number of regional business decision-makers, especially as the North East economy is a net exporter, and uncertainty over such an important issue could well affect investment and planning decisions over the next few months.”
The research is part of R3’s long-running Business Distress Index, which tracks levels of growth and distress in companies right across the UK.
More than a third (37%) of North East company owners did not express concern about any of the seven business topics raised by R3 in its research, while almost a fifth (19%) were worried about two or more of them.
Neil Harrold continues: “The level of regional concern about the introduction of the National Living Wage, which is slightly higher than the national average, may have its roots in the prevalence of hospitality industry businesses in the North East.
“This is a sector where the financial impact of these new rules is expected to be felt especially keenly, and it will be interesting to see how these expectations play out in reality over the coming months.
“Businesses have generally enjoyed a period of widespread, rapid growth, boosted over the last year by low inflation and low fuel costs. However, as well as slowing economic growth, they will have to contend with a range of new compliance and reporting burdens in the next few years, and this could put some firms’ finances under significant pressure.”