Businesses across the globe most constrained by regulations and red tape

red tape tops business frustrations for fifth year running

Brazilian, Russian, Polish & Greek businesses most affected.

The Grant Thornton International Business Report (IBR) has found that red tape and regulation is the biggest frustration faced by businesses around the world - for the fifth year running. When asked to rank constraints on ability to expand, red tape was quoted by nearly four out of ten businesses worldwide compared with just two out of ten, or fewer, quoting cost of finance, shortage of working capital or shortage of long term finance. The next most important constraint was shortage of skilled labour, quoted by more than three out of ten businesses.

Top of the red tape table was Brazil (60%) closely followed by Russia (59%), Poland (55%) and Greece (52%). More than four in ten businesses in Germany, Argentina, South Africa, Turkey, Italy, mainland China and New Zealand felt red tape and regulation were a constraint on their ability to grow. The businesses experiencing the least restraints by red tape were from Singapore (16%), Spain (17%) and Sweden (19%).

Alex MacBeath, global leader of privately held business services for Grant Thornton International comments: "Although many governments continue in their efforts to simplify red tape, many have been unsuccessful. In today's global economy, with increasing pressures from emerging economies, governments must ensure their regulatory environment responds to the speed of business change

"The plea must be that governments work closely with business, and those organisations which understand the privately held business sector, to identify their future needs and aim to address the regulatory issues ahead of the need rather than constantly playing 'catch up'.

Significant numbers of businesses also feel that accessibility to skilled labour is holding them back. This varies considerably by country with New Zealand (60%), Australia (59%) and South Africa (58%) experiencing greater problems with skill shortages than any other countries.

Interestingly, in a world of optimism about demand and orders, three countries in Asia - Japan (59%) Thailand (54%) and mainland China (50%) - are having significant concerns about shortage of orders and lack of demand constraining their ability to expand. This compares with just 29% of businesses worldwide

"Alex MacBeath continued, finding skilled labour is a big issue for the growth economies of New Zealand, Australia and South Africa. These countries have not benefited in the way that the EU, for example, has in terms of substantial inflows of skilled migrants from Eastern Europe.

"The lack of demand issue is a real worry in two major Asian economies. In Japan, it is possible that businesses are yet to be convinced that consumer demand has emerged from the doldrums of the past decade. In mainland China's case it is likely that with the US taking almost one quarter of exports that businesses are concerned about their sales. This is probably due to the US economy's slowdown this year and the impact on domestic demand of mainland Chinese authorities taking action to cool the economy."

Ends

Notes to editors

Grant Thornton International started a major annual survey of the attitudes and expectations of small and medium-sized businesses in 1992 called the European Business Survey (EBS). In 2003 the research project was widened to an international perspective covering medium-sized businesses and renamed the International Business Owners Survey (IBOS).

In 2007, the survey's name was changed from IBOS to the International Business Report (IBR). The IBR survey draws upon 15 years of trend data for original EBS participants and 5 years for original IBOS countries. 15 year trend data is available for: France, Germany, Greece, Ireland, Italy, the Netherlands, Poland, Spain, Sweden, Turkey and the UK, while 5 year trend data is available for Australia, Canada, Hong Kong, India, Japan, Mexico, Singapore, South Africa and the US.

Grant Thornton International will donate US$5 to UNICEF for every completed IBR questionnaire. In 2007 this will result in a donation of over US$35,000.

The research was conducted by Experian Business Strategies Limited and Harris Interactive. All figures were correct at time of going to press. To find out more about IBR and to obtain details of IBR reports and results please visit www.internationalbusinessreport.com.

About Grant Thornton International

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