Columnist

Business growth requires the right environment

Any landscaper will tell you that even the most beautifully designed garden will fail if the environment around it works against it. 

Healthy plants, solid design and expert care can only go so far if the soil is depleted, the climate is hostile or the conditions shift faster than the landscape can adapt.

The same is now true of businesses across the North East.

The headlines across the region have barely shifted for months - another closure, another long-standing firm disappearing from an industrial estate, business park or high street.

From Tyneside to Teesside, from Sunderland to the rural edges of Northumberland, the story is now so familiar that it risks losing its impact.

Yet this is not an isolated downturn. 

Insolvencies across the UK have risen to their highest levels since the financial crisis, and the North East, already operating with tighter margins, lower average disposable income and a concentration of cost‑sensitive industries, has even less capacity to absorb sustained shocks. 

Many firms were running lean long before energy volatility, supply‑chain inflation and tax reforms took hold. 

Now they are running out of room to manoeuvre.

Costs have climbed across every major category, materials, fuel, utilities, insurance, borrowing. None show signs of easing. 

And for SMEs in particular, the economics that worked in 2021 are simply no longer sustainable.

At the same time, wage pressures have accelerated sharply. 

The National Living Wage has risen by more than 20 per cent since 2021, reshaping salary expectations across entire workforces. 

Few employers argue against fair pay, but the speed of change has narrowed the gap between entry‑level and experienced roles. 

When the cost difference becomes negligible, hiring naturally becomes more risk‑averse. 

Businesses favour proven experience, not potential, and younger or less‑experienced workers increasingly struggle to secure that critical first step. 

In a region where unemployment sits around 5–6 per cent, noticeably higher than the UK average of roughly 4 per cent, narrowing entry routes does not just slow progress, it entrenches disadvantage.

Meanwhile, the National Living Wage ‘name and shame’ lists suggest the issue is simple - businesses should simply pay what is required.

But some of the organisations appearing are not small or poorly structured. 

They are established employers with robust systems and experienced finance teams. 

When firms of that scale struggle to keep pace with the rate of change, it signals a deeper structural issue, one that smaller operators feel even more acutely.

Layered on top are additional pressures, corporation tax rising from 19 per cent to 25 cent, higher employer National Insurance contributions and business rates that often fail to reflect real‑world trading conditions. 

Any buffer that once helped companies absorb temporary shocks has been eroded. 

Cashflow is tighter, contingency has evaporated.

The North East feels these pressures more intensely because its economic landscape is built on SMEs, family‑run firms, construction companies, manufacturers, trades, care providers, logistics operators and hospitality businesses, sectors disproportionately affected by rising input and labour costs. 

Many operate in semi‑rural areas where overheads are higher and demand more variable. 

Others depend on public‑sector‑linked workstreams where budgets have not kept pace with inflation. 

As major employers consolidate or exit, local supply chains weaken further.

We are, in short, a region expected to grow without being given the conditions required for growth.

This raises an unavoidable question: are small and medium‑sized businesses still part of the economic plan? If the answer is yes, as it must be, then the environment around them requires deliberate correction.

Part of that starts with recognising how accelerated wage growth, however well‑intentioned, has reshaped the labour market in ways that risk excluding those with the least experience. 

Supporting early‑stage employment is not just a social good, it is an economic necessity. 

If businesses can hire freely at entry level, unemployment falls naturally. When they cannot, it does not.

Equally, viable SMEs under sustained pressure need targeted, short‑term stabilisation, not indefinite subsidy, but the same kind of focused intervention that protected jobs during Covid. 

The tools already exist, and the cost of using them is far lower than the cost of widespread closures.

And policy must stop evolving without the input of the very businesses it affects.

SMEs make up more than 99 per cent of UK companies and employ around 60 per cent of the private‑sector workforce. 

When they struggle, local economies retract, spending drops and the pressure shifts back onto the state. 

Sustainable growth is impossible if those responsible for delivering it are excluded from the conversation.

Across the region, the sentiment is increasingly shared, this does not feel like support. 

It feels like survival. 

And the decisions that follow, made quietly in offices, workshops and kitchen tables, carry consequences that ripple far beyond the businesses themselves.

These closures are not the result of bad planting or weak design. 

They are the result of an environment no business, however well built, was designed to withstand. 

Change the conditions, and the landscape can flourish again. Leave them as they are, and decline will not be the exception. It will be the ecosystem.

Simon Wilkinson is managing director of Wilkinsons Landscapes

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