Signs of UK business growth have fallen to 2013 levels, says R3

Around 57% of businesses reported a sign of business growth in March, compared to 69% in a previous survey in December 2015, new research from insolvency trade body R3 shows. R3 says the figures show that UK business growth has fallen back to 2013 levels, and are the first signs of businesses’ performance flattening out. However, it says, signs of business distress are still relatively low.
The figures are from R3’s latest Business Distress Index, a long-running survey of 500 UK businesses. Since October 2013, the survey has shown at least 65% of businesses reporting at least one sign of growth. The 12-point fall in levels of business growth is the largest recorded in four years.R3 suggests the reasons for the fall include uncertainty over the future of the UK in the EU, stock market worries or incoming compliance and reporting changes.

Signs of business distress and growth

The latest Business Distress Index shows 18% of UK businesses are showing at least one sign of distress. Signs of distress measured by R3 include:

• decreased sales volumes (8% of businesses)

• decreased profits (7%)

• having to make redundancies (6%)

• regularly using maximum overdraft (5%)

• fallen market share (5%).

R3’s measured signs of business growth include:

• increased profits (35% of businesses)

• increased sales volumes (33%)

• investing in new equipment (25%)

• business expanding (25%)

• growing market share (23%)

R3 comment

R3 president Andrew Tate says: ‘UK businesses have moved into a new phase of the economic cycle. The relatively rapid growth associated with recovery and the boost provided by low inflation and low fuel costs last year look as though they are now falling away.

‘This is a deceleration rather than businesses going backwards. Some businesses may be consolidating following periods of rapid growth rather than running into real trouble. Levels of distress are still relatively low.’

Source: Press Release: Signs of UK business growth in biggest fall in four years—R3

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