- 24% of Northern businesses plan to increase borrowing compared to 11% of Southern counterparts.
CAMBRIDGE, England, Jan. 30, 2025 /PRNewswire/ -- 24 percent of businesses in the North compared to just 11 percent in the South, intend to increase borrowing to fund growth, finds research by Price Bailey, a Top 30 firm of accountants.
Price Bailey surveyed 750 Finance Directors who work for businesses with a turnover of £10m-100m, asking them about projected sales volumes and the prices of the goods and services they provide. The full report can be found here.
The survey suggests that while businesses in the South are in a better position to finance growth through cash reserves or attracting investors, their counterparts in the North are much more reliant on debt, which is still expensive by the standards of the last 15 years.
The results reveal that overall, the two most popular methods of funding growth are via equity finance (52%) and cash reserves (49%), although significant regional disparities are evident.
The research also reveals an approximate 2:1 ratio of finance directors who anticipate a reduction in borrowing compared with those who anticipate an increase. In total, 28% of finance directors anticipate that their business will borrow less over the next 12 months, compared with 15% who believe it will borrow more.
Chand Chudasama, Partner in the Strategic Corporate Finance Team at Price Bailey, comments:
"While UK businesses are generally bullish about their growth prospects over the next year, there is a marked regional divide in how that growth will be funded. Businesses in the South have, on average, carried forward stronger balance sheets and we know from our prior research, also tend to hold better access to investors, which gives them more options for funding growth.
"For businesses in the North, generally, we can conclude there is a greater reliance on debt which may limit the potential for growth as rates remain relatively high, and the costs of doing business are rising."
He adds: "There is also a notable trend towards share buybacks - meaning money that could have funded growth is instead being used to return value to shareholders. This could indicate a lack of confidence in the UK's business environment as shareholders look to extract value rather than reinvest."
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