UK small businesses worried about the economic outlook UK SMEs worried about economic outlook

Britain's small and medium-sized enterprises are deeply concerned about the outlook for the economy, research finds.

Brexit is worrying employees

Brexit is worrying employees

 

Most business leaders are wary about their prospects for growth, according to the Close Brothers Business Barometer.

The research suggests SME confidence has actually fallen back since the beginning of the year, with businesses now buffeted by a broad range of headwinds.

Only one in five SMEs in the latest barometer survey now say they are confident about the steady recovery of the economy, with a further 31 per cent suggesting that the path back to prosperity will be slow, even though they feel the worst of the challenges associated with the economy are now behind us.

More than a quarter of SMEs fear the economy could decline again, up slightly from the 25 per cent that felt this way at the beginning of the year.

In addition, close to a quarter actually warn they had not yet seen any true economic recovery, or even say they think the economy is worsening; this is the same number that felt this way at the start of the year.

The pessimism of so many SMEs reflects a variety of problems. The macro-economic outlook worries many business leaders, as the UK faces uncertainty ahead of the referendum on European Union membership later this month and the global economy continues to waver.

But SMEs also face issues such as the higher costs of the national minimum wage, pension auto-enrolment and new tax regulation.

Just a fifth of SMEs expect their business to expand over the next 12 months, while as many as 57 per cent are anticipating no growth at all. One in ten actually expects to see their business contract over the year ahead, or even to close down.

David Thomson, CEO of Close Brothers Invoice Finance says, ‘We know that many entrepreneurs and business leaders have exciting and ambitious plans for their companies, but fear their plans are not achievable against a backdrop of economic uncertainty and rising costs; in many cases, SMEs now feel even more pessimistic than they did at the beginning of the year.’

The figures also indicate that SMEs can ill afford another 12 months of disappointing results, with many having achieved no growth over the past year.

More than half (52 per cent) say their businesses hasn’t grown at all during the past 12 months.

Thomson adds, ‘After the financial crisis of 2008, we saw similar low levels of confidence in SMEs. We found it was the businesses that explored every possible funding option and ensured their enterprises were constructed on firm financial foundations that were able to ride out the uncertainty and continue working towards their growth ambitions.’

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