East Anglia: Rising fuel costs a major obstacle to growth, says insolvency trade body R3

Shay Lettice of Peters Elworthy & Moore, east region chairman of R3

Shay Lettice of Peters Elworthy & Moore, east region chairman of R3 - Credit: Roger Adams

FIRMS in the eastern region are suffering fewer signs of distress but growth remains elusive, according to a new survey.

Despite fewer firms citing funding difficulties as a barrier, the rising cost of fuel is proving to be a major obstacle for many businesses, says the latest Business Distress Index report from insolvency trade body R3.

Research for the report found that more than one third of businesses in the region (36%) view rising fuel costs and utility bills as the biggest problem they face, followed by reduced consumer spending (28%).

The proportion of businesses reporting growth indicators has fallen since November 2012 from 56% to 53% and the proportion confirming investment in new equipment has also declined, from 44% last November to 20% in the latest survey.

However, only around one in 10 businesses (11%) report regular use of their maximum overdraft facility, and only 8% of respondents identify an inability to secure further credit or a bank loan as a key problem.

R3’s eastern region chairman, Shay Lettice, a partner at Cambridge accountancy firm Peters Elworthy & Moore, said: “Concerns over utility bills and revenue show that businesses still feel they are being squeezed on both sides, making it hard to cut costs.

“However, with the relatively low number of respondents deeply concerned about securing credit or a bank loan, access to funding appears to be dissipating as an issue.

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But, he added: “This may be an indication that businesses are deleveraging where possible and becoming accustomed to reduced credit availability. Unfortunately, this can only be viewed as a feeder for economic stagnation.”