SME confidence has recovered since the shock of the Brexit vote, but business owners doubt whether Theresa May’s government can really help them seize the opportunities, according to the latest quarterly Smith & Williamson report.
The Smith & Williamson Enterprise Index finds that 73 per cent of business owners are confident in their own prospects for the next 12 months, a surge of 20 points on the previous quarter. While economic confidence has recovered, SME confidence in the government’s commitment to supporting private enterprise fell five points to 54 per cent, the lowest since 2014.
Guy Rigby, head of entrepreneurial services at Smith & Williamson says that, for the time being, nothing has changed from a practical point of view and that, despite the rhetoric, there is a detailed and balanced negotiation to be had.
Rigby says, ‘The drop in SME confidence in the government highlights that SMEs have viewed the change in political leaders with suspicion. As we move into the Autumn Statement, it would be good to see the Conservative government show strong support for the entrepreneurial community.”
The Smith & Williamson Enterprise Index, which measures the views and confidence of close to 250 owner-managers and entrepreneurs in the UK, moves almost 10 points higher from 97.7 to 107.4 [its baseline being 100].
Almost one in two respondents now expect the economy to improve over the next 12 months, a 16 per cent increase over the previous quarter. Given the deep economic inter-dependency between the UK and the EU, there is a sense that we can make Brexit work.
SME businesses are the engine of UK growth
Rigby adds, ‘For many, the Great British Bulldog, with its famous ‘can do’ attitude, is back and the recent growth statistics are hugely encouraging.
‘Only time will tell, but it’s worth remembering that the recession inspired huge growth in the number of small businesses, alongside a surge in individual capitalism. These businesses are the engine of UK growth and will not be easily defeated.’
There have been a number of Enterprise Index records set in this third quarter of 2016; 69 per cent of those exporting expect their turnover to increase over the next 12 months.
More than half (59 per cent) of respondents expect to increase headcount over the next three months and over 75 per cent of businesses are planning for growth or acquisition in the next 12 months, a 16 per cent rise on the previous quarter.
Politicians must do more
Rugby says that while some confidence has returned, it has not recovered its pre-Referendum level. The forthcoming Autumn Statement must therefore be pro-business, to maintain this positive momentum.
Respondents almost universally agree that the upcoming Autumn Statement needs to focus on supporting smaller and scale-up businesses with only 14 per cent believing otherwise. Finally, only 16 respondents absolutely disagreed with the statement ‘the plan for quarterly online tax reporting will have a negative effect on my business.
Rigby concludes, ‘It is vital that a modern Britain has a modern tax system to support itself.
‘However, the introduction of this new system heralds a sea change in the way business records must be maintained and increased tax compliance reporting obligations but does not allow the necessary time for businesses to adapt and develop appropriate systems to be able to provide this information.’