Despite mass uncertainty surrounding financial markets and a variety of investment products in the wake of Brexit, there is considerable investor confidence in UK small and medium-sized enterprises (SMEs), according to research of 1,000 UK investors commissioned by IW Capital and Crowdfinders.
The research finds that 52 per cent of the investors surveyed say they would support the UK’s SMEs through private investment channels in the aftermath of Britain’s decision to leave the EU, equating to 12.9 million investors across the country.
When viewed in comparison to post-Brexit sentiment towards alternative asset classes, the statistics are drastically lower; according to Lloyds Bank, investor sentiment towards property dropped by 35.36 percentage points between June and July 2016, while sentiment in relation to UK shares (-21.75 per cent) and government bonds (-15.58 per cent) also fell sharply in this period.
The index demonstrates the impact of the post-Brexit economic climate on investor confidence levels across the UK, with many investment markets adversely affected in the weeks following the EU referendum.
Declines in investor confidence
In mid-July 2016, the Index fell to its lowest level since it was launched in March 2013, with property, government bonds and corporate bonds all experiencing notable declines in investor confidence.
Moreover, there is a high degree of uncertainty among UK adults towards the long-term financial consequences of the EU referendum result. When asked if they were confident on the implications of Brexit on the FTSE, 55 per cent of respondents (the equivalent of 28 million people across the country) say they are not.
Similarly, 52 per cent say they are not confident on the impact Brexit would have on the property market. A further 49 per cent are unsure on the security of the pound as a result of leaving the EU.
When looking to the future-facing profile of Britain’s investor community, the statistics are significantly in favour of British SMEs as a viable investment opportunity post Brexit.
Some 70 per cent of the younger age bracket of investors (18-34 year olds) say they will consider investing in SMEs post Brexit.
Furthermore, in a nation divided both geographically and politically as a result of the Brexit vote, the highest proportion of investors in a regional comparison who would back SMEs post Brexit was based in London, with 68 per cent of investors in the capital reporting that they would support small businesses through private investment.
Luke Davis, CEO of IW Capital and co-founder of Crowdfinders says that following Brexit, Britain has been in a state of limbo, with consumers and investors unsure how the economic landscape will change over the coming months and years.
‘Our research supports this and shows that there is still a great deal of uncertainty surrounding what the result of the EU referendum will mean for the long-term prospects of the FTSE, the property market and the value of the pound,’ he adds.
‘However, what we can take from this research is that there is a silver lining from a business perspective as our nation’s investors are willing to support SMEs in the wake of Brexit, something that cannot be said for other investment classes.’
David adds that, in times of economic uncertainty, ensuring support for the nation’s private sector and particularly the SMEs that make up 99.9 per cent of all private businesses, is of paramount importance.
‘It is now our job as investment providers, and partly the responsibility of the government, to ensure investors are equipped with the right tools and information to help them act on their investment decisions and navigate this uncertain period with confidence.’
Further reading on Brexit
It is the final week of nominations for the British Small Business Awards! Sponsored by Vistaprint, the Sole Trader of the Year and Micro Business of the Year (2-7 staff) categories are open until July 29th. Nominate for these categories here, and also make sure you consider our Small Business of the Year (10-50 staff), Leader of the Year, Innovation of the Year, Website of the Year, and Campaign of the Year categories. Good luck and see you on October 20th at the Grand Connaught Rooms!