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West Midland’s mid-market businesses poised to raise prices

Mid-sized businesses in the West Midlands are preparing to raise their prices in response to spiralling inflationary pressures, according to new research from Grant Thornton UK LLP.

In its latest Business Outlook Tracker* survey, Grant Thornton found that one third (36%) of mid-market firms in the West Midlands have already raised their prices, with a further 28% intending to do so in the near future.

More than a third (38%) of these businesses expect a price increase to remain in place for at least 12 months, while 13% anticipate that this will be permanent.

The research also found that amid rising costs, wage inflation and energy bills, confidence in the mid-market has dipped. Just 64% of respondents in the West Midlands are optimistic about the outlook of the UK economy, a -6 percentage point (pp) decrease compared to February (70%).

The latest Tracker also recorded a fall in West Midlands respondents reporting revenue growth optimism – 66% of business leaders indicating they were confident compared to February’s total of 68%.

These challenges have also led to changes in investment priorities. Investment expectations for the next six months have dropped significantly across all areas monitored by the Tracker, except employee benefits (+12pp), R&D (+8pp), recruitment (+4pp) and technology (+4pp).

The most significant drop in the West Midlands (-14pp compared to the last Tracker) is seen in skills development. This is followed by employee wellbeing (-8pp), growing in international markets (-6pp) and plant, machinery and buildings (-4pp).

Sue Knight, Partner and Practice Leader at Grant Thornton UK LLP in the Midlands, said: “With inflation running at 9% and predicted to rise even further, the mid-market in the West Midlands is bracing itself for another challenging period. If they haven’t done so already, many are seriously considering when they need to increase prices in order to maintain acceptable profitability and cashflow levels.

“Acting quickly and decisively to manage rising inflation rates could mean passing on increased prices to the consumer, but management teams also need to be looking at every aspect of their business to identify potential savings.

“Due to the current situation, there’s been a real shift in the mid-market’s priorities, with the increasing uncertainty stalling investment expectations. This is likely because many businesses are facing a double squeeze, with almost every cost increasing alongside rising concern from the potential of slowing consumer demand.”

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Inflation is causing businesses to raise their prices

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*The Grant Thornton Business Outlook Tracker is a bi-monthly survey of UK mid-market businesses which commenced in January 2021. Censuswide (on behalf of Grant Thornton UK LLP) surveyed 604 senior decision makers in UK mid-market businesses between 7-14 April 2022. The mid-market is defined as businesses with turnover between £50million – £500million. 50 mid-market businesses in the West Midlands took part. About Grant Thornton UK LLP Grant Thornton is one of the world’s leading organisations of independent assurance, tax and advisory firms. We are an adviser that delivers technical expertise and a personal, proactive and agile service that goes beyond. The UK member firm is part of a global network that employs 58,000 people in 135 countries. We combine global scale with local insight and understanding to build relationships and deliver the services you need to realise your ambitions. The UK Grant Thornton member firm is led by over 200 partners and employs over 5000 of the profession’s brightest minds. We are a business adviser that celebrates fresh thinking and diverse perspectives to bring you proactive insights and a service you can trust. Find out more at @GrantThorntonUK © 2022 Grant Thornton UK LLP. All rights reserved. ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton UK LLP is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. This publication has been prepared only as a guide. No responsibility can be accepted by us for loss occasioned to any person acting or refraining from acting as a result of any material in this publication.

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