UK’s mid-sized businesses warn of reduced stock and higher prices because of staff shortages

04 October 2021

  • War for talent heats up as businesses compete for staff
  • Higher wages to attract new joiners could risk further increases in inflation

Staff shortages and supply chain disruption are putting severe pressure on the UK’s heartland of mid-sized businesses according to a new report released today.

According to the findings from accountancy and advisory firm BDO, over a quarter (26%) of mid-tier businesses say staff shortages are putting the most pressure on their ability to operate at normal levels. The UK’s mid-tier is the UK’s economic heartland, representing one in four jobs across the economy. 

More than a quarter of all businesses also say that reduced stock caused by supply chain disruption is putting pressure on their operations. 

The knock-on impact on consumers is likely to be significant. Over a third of businesses (34%) have reduced product lines and services on offer, with a further 30% planning to do the same this month unless the situation radically improves. Nearly a third (29%) of all businesses expect these reductions to be long-term. 

On top of this, almost a third (29%) of businesses surveyed say pricing of their products or services will need to increase in the next three to six months. 

Businesses believe staff shortages are being caused by a number of market factors. A third cite their top issue as a shortage of overseas workers created or exacerbated by the pandemic, while 31% blame Brexit for their shortage. Whilst a lack of overseas talent is clearly having an impact, 38% see their top recruitment challenge as unavailability of talent in their region.  

As staff shortages continue, the war for workers is intensifying. Nearly a fifth (19%) report increasing wages to attract new joiners, which could have a knock-on effect on already high levels of inflation. Other methods include introducing perks to make an employer more attractive to candidates (29%) and a similar number are trying new recruitment strategies.  

Commenting on the report, Ed Dwan, partner at BDO, said: 

“Brexit, global supply chain issues and the long tail of Covid-19 has 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.”

ENDS

Note to editors

Methodology

Bimonthly survey of 500 medium-sized businesses. Medium sized businesses are defined as businesses with revenue between £10-£300m. The survey was conducted by Censuswide on behalf of BDO in July 2021. 

BDO LLP

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world. 

Our clients are Britain’s economic engine – ambitious, entrepreneurially-spirited and high-growth businesses that fuel the economy.  

We share our clients’ ambitions and their entrepreneurial mind-set. We have the right combination of global reach, integrity and expertise to help them succeed.  

BDO LLP operates in 18 offices across the UK, employing 6,000 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.

BDO’s global network
The BDO global network provides business advisory services in 167 countries, with 91,000 people working out of 1,658 offices worldwide. It has revenues of $10.3bn.  

Contacts    

Tom James / Tom Grant 
On behalf of BDO LLP
Email: [email protected]


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