Three in five (59 per cent) businesses believe their prospects will improve in the next year.
New data from Smith & Williamson’s inaugural report – Dream bigger: The scale-up moment – reveals that in a show of confidence from the UK’s business community, a quarter (26 per cent) go as far to say that their position will improve ‘significantly’ over the coming 12 months.
The study also indicated that business leaders are growing tired of delaying expansion plans as they wait for the outcome of Brexit.
One in three (33 per cent) say they will increase their level of borrowing in the next 12 months to fund growth plans, with nearly one in five (17 per cent) saying they would borrow ‘much more’. More than half (52 per cent) of the UK’s businesses plan to increase their headcount over the same period, with this rising to 71 per cent among companies with 50-250 employees.
According to research, banks and investors could be loosening their purse strings. More than one in three (38 per cent) companies in the sample believe that access to finance has improved in the last year – almost four times the 11 per cent of firms which feel it has worsened.
Businesses are slightly less optimistic about the economy than about their own future, with 57 per cent forecasting economic growth in the next year, although this is still almost double the 30 per cent which felt the same way in Q4 2017, reported in Smith & Williamson’s Enterprise Index.
Unexpectedly strong performance by the UK economy in the face of Brexit negativity has contributed to this rise in confidence. In addition, the UK is benefitting from a growing global economy, a slightly more stable political environment and a tax system which has not had to face continuous overhauls following Philip Hammond’s decision to have only one showpiece Budget each year.
Businesses in London are more optimistic about the future
Sentiment did vary regionally, with London-based companies far more bullish about their future. Three quarters (75 per cent) of businesses in the capital see their prospects improving in the next year, with more than half (53 per cent) planning to increase their borrowing.
However, in the West Midlands, this drops to 59 per cent and 12 per cent respectively, highlighting the difference between London and regional economies.
While three in five (63 per cent) businesses based in London believe the funding environment has improved, other regions are less positive. For example, in the South-East and South-West only 20 per cent believe that access to funding has eased.
Guy Rigby, head of entrepreneurial services at Smith & Williamson says that the UK continues to have a fertile business environment which is being helped by a buoyant world economy. He adds that interest rates remain low, employment is strong, inflation is falling and the cumulative effect of these is contributing to the confidence of our entrepreneurs,
‘While the entirety of the UK is a great place to start and grow a business but there are concerns that regional development is falling behind,’ he says.
‘London has everything that growing businesses need and this creates a clustering effect: businesses of a similar size and type gather together, creating a powerful ecosystem – developing knowledge, generating jobs, increasing access to finance and, as time progresses, a snowball effect occurs.’
‘As a nation, we need to find ways of encouraging this type of business clustering outside London. It’s possible that faster progress could be achieved by a relaxation of local planning policies and the judicious use of business rates relief by Councils.’