With election fever in full flow, ICAEW hosted The Small Business Debate at Chartered Accountants’ Hall on 17 June. An audience comprising ICAEW members together with members of the Federation of Small Businesses and Enterprise Nation enjoyed a healthy debate on policy manifesto positions from senior MPs representing Conservative, Liberal Democrat and Labour.

The views of ICAEW members are incredibly important to us. Indeed, they were instrumental in the ICAEW Manifesto, published earlier in the year, which outlines ICAEW’s vision for a renewed and resilient UK under a series of seven key themes and 60 specific policy recommendations for the next government. It was good to see many of the topics ICAEW members have raised, discussed at the event. 

Throughout June, ICAEW members have continued to share their challenges and insights on business conditions with the business team, captured through our regional, national and international networks. 

Market conditions

Access to finance and funding options for businesses continue to present challenges. Stability and uncertainty remain a barrier to investment, further impacted by the cost and availability of capital for those with the appetite to invest.

In the past few weeks, members have reported an easing of constraints, with a member in the South West commenting that “the bank has been very helpful and increased the overdraft”. This was echoed by a member in the West of England who noted “private funding is more fluid with recent successes in fundraising”, while noting less availability of other sources, including grant funding and R&D.

Scottish members warned: “Scotland is historically strong in the equity area, but recent signs are that it’s now harder to raise capital.” Challenges remain for early-stage ventures without a track record, with some smaller businesses “prioritising core business functions and delaying product development to optimise cash flow”. An exception was reported in Wales: “The Development Bank of Wales has been helpful” and prepared to take on more risk.

Much appears to be sector-dependent on. “Banks are very difficult and setting unrealistic covenants – they don’t get retail,” reported one practice member who advises the sector. Members working in larger FMCG businesses have invested in technology to improve efficiency and the customer experience. Increasing marketing spend and use of app technology has led to increased sales, despite poor weather, which has impacted footfall in the wider retail sector. 

“The UK market is holding up and exports are doing better, with a significant decrease in supply costs,” reported a member working in manufacturing. “The business is planning a big year of investment with automation of the production line to increase capacity and improve efficiency.” 

Manufacturing sector members highlighted issues relating to vehicle fleets with reports of the price of a transit van “currently £30k, compared with £19k back in 2019, with lead times of nine-18 months”. While there is appetite to switch to electric vehicles, the mileage range for businesses with national distribution networks is proving a barrier. 

Disruption in the Red Sea continues to have an impact on availability, timing and cost of supply, with members bemoaning container prices back to post-COVID levels. For perishable products, delays cause an additional problem, with the late arrival of products having an impact on quality.

Skills/labour market

The labour market remains a key determinant of the trajectory of interest rates and a barometer of business confidence. Easing of labour constraints has been widely reported in the media, nonetheless wage inflation remains sticky. 

A member working in the training sector highlighted a record intake of trainees for autumn, with practice firms increasing cohort sizes to meet increased workload. Capacity in the sector, especially in audit, remains a problem with firms turning away work with falling inflation leading to “some moderation in salary rises in comparison to the past 24 months”.

Across business, meanwhile, “employers are being more careful with recruitment decisions with a focus on positions that will drive growth”, noted a member who advises a portfolio of businesses in the West of England. “Salary inflation is being driven by niche roles” with employees questioning, “do we need more human resources or technology resources?”

The ongoing impact of the increase in the National Living Wage continues to be raised by members working in retail, hospitality and manufacturing sectors. “Wage pressure from the National Living Wage had a significant impact on payroll costs as 70% of the workforce are at this level,” reported a member based in the Midlands who works for a large retail business. 

Despite ongoing challenges, with the weather improving and a general election date confirmed, there are glimmers of positivity emanating from member discussions. Fingers are also crossed for a successful campaign in the Euro 2024 championships. Sadly, Scotland are out, but the longer England remains in the tournament the greater the hope of an associated uptick in consumer spending and a boost to business. 

On the subject of football, a recent event hosted by ICAEW’s Entertainment, Sport and Media Community explored the future of football. With unique insights from prominent figures within the sector, the event is now available to view on demand. 

Meanwhile, ICAEW’s Annual Conference will this year take place on 4 October in central London. The packed conference agenda includes forward-looking insights on the economy and presentations from industry experts on topics including sustainability, technology and leadership. It’s an event not to be missed. 

Share your insights with ICAEW’s business team.