For the second year in a row small and medium sized enterprises (SMEs) based in the East of England are saving the most money in their business savings accounts with the average balance standing at £707,000, according to new research from specialist challenger bank Hampshire Trust Bank.
While SMEs in the East are once again top of the table when it comes to the amount held in business savings accounts, they are saving 27 per cent less than in the run up to the EU Referendum. The national average for business savings is £446,000, a 20 per cent drop compared to last year.
According to the data, only SMEs in the East Midlands have grown their business savings balances since 2016 – increasing their savings pots by nine per cent to £670,000. Scottish SMEs have decreased their business savings balances the most (-40 per cent), stating they have done so in order to invest in the development of their business, followed by smaller businesses in the South East (-30 per cent), the East and London (-27 per cent each).
While businesses in the East of England have the largest savings pots, those based in the North East and South West are the most active savers, investing 69 per cent and 66 per cent of total funds respectively in business savings, higher than the national average of 52 per cent.
Firms in the North West, West Midlands and Wales invest significantly less than the national average in business savings accounts – 41 per cent, 42 per cent and 43 per cent respectively. When asked why they kept money in current accounts, the businesses cited the need to have the money as a readily available source of capital for regular payments (25 per cent, 33 per cent and 43 per cent respectively).
Stuart Hulme, director of savings at Hampshire Trust Bank, says, ‘We appreciate that this is a challenging time for UK SMEs, with the current uncertain economic and political environment impacting on savings balances across the UK. However, it is encouraging to see that on average smaller businesses are still investing 52 per cent of total funds in business savings, just five per cent less than last year’s figure of 57 per cent.
‘Rather than stockpiling cash in current accounts, SMEs should consider shopping around for a business savings account that provides a better rate of return, enabling them to make more of their hard-earned cash.’