The staff shortages and supply chain problems afflicting the UK are putting severe pressure on the country’s mid-sized businesses, leading to lower stock levels and potentially higher prices.
According to a survey of 500 companies by the accountancy and advisory firm BDO, 26% of mid-tier businesses, which represent one in four British jobs, are having trouble operating at normal levels because of the labour crunch.
In addition, more than a quarter of the companies said supply chain disruptions have led to reduced stock, putting further pressure on their operations.
Some 34% of mid-sized businesses have already reduced their product lines and services, while a further 30% are planning to do so this month unless the situation "radically improves". Nearly a third expect the reductions to be long term, BDO said.
Businesses blame the shortage of labour on a number of factors, with a third saying there is a shortage of overseas workers due to the pandemic, while 31% cite Brexit as the main reason.
Meanwhile, 38% said unavailability of talent in their region is the biggest challenge.
In order to attract staff, businesses are increasing wages (19%) and offering perks (29%).
The knock-on effect of staff shortages and supply chain constraints will be felt by consumers. According to BDO, 29% of the businesses surveyed said their prices will need to increase in the next three to six months.
Commenting on the report, Ed Dwan, partner at BDO, said: “Brexit, global supply chain issues and the long tail of Covid-19 have created a perfect storm for UK businesses. After navigating the challenges of the pandemic and hoping for some respite, businesses have found themselves facing more major disruption, with those across almost all sectors reporting staff shortages.
“This is an era of upheaval, and the challenges faced by the UK’s mid-tier – the engine of the UK’s economy – points to a long road ahead.”
In its survey, BDO defined medium-sized businesses as those with revenue between £10mln-£300mln.