SMEs show cautious optimism despite Brexit
TWO THIRDS of UK small- and medium-sized enterprises (SMEs) said their confidence in the economy has stayed the same or increased over the past year, despite concerns about Brexit.
The Barclays business sentiment survey found that 47 per cent of small businesses expect their confidence in the UK economy to stay the same in 2017, with the rest evenly split between optimists and pessimists.
Furthermore, many businesses were optimistic about their turnover this year. 45 per cent of SMEs expect growth of up to 10 per cent , while a further nine per cent expect their revenue to grow between 11 and 20 per cent.
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Overall, the research indicated average expected growth of four per cent among the 1,010 businesses surveyed, well ahead of most growth forecasts for the UK economy as a whole this year. Barclays forecasts GDP growth of 0.4 per cent for 2017.
“Although businesses generally appear to be less confident than in our survey last year, when 40 per cent thought that confidence in the economy would increase, expectations for turnover suggest cautious optimism,” said the study.
Brexit topped the list of SMEs’ concerns, with an overwhelming 86 per cent of respondents saying the referendum result has impacted their confidence in the wider economic climate. They urged for greater clarity regarding negotiations and how they might affect all businesses.
The weak pound, triggered by the Brexit vote, was a particular point of concern. Exchange rates were a cause of worry for 30 per cent of businesses, but 64 per cent of respondents expect to maintain their current overseas trading levels this year.
When it comes to investing in their business, 65 per cent of respondents expect levels to stay the same over the next 12 months, compared to 23 per cent who expect it to increase and 12 per cent who expect it to fall.
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However, outlook varied depending on the size of the business surveyed – 32 per cent of larger SMEs expect capital investment to increase, compared to 18 per cent of smaller SMEs.
“2016 was certainly an eventful year, not least for British businesses, it was a year in which a lot of uncertainty has been unsettling for many,” said Adam Rowse, head of business banking at Barclays.
“However I am pleased to say that since the EU referendum result, I’ve spoken to many people who are positive about their own business’ prospects, a sentiment that has been borne out in the results of our survey.
“With major change, uncertainty often follows, but where there is change there is also opportunity for business. We can see that two thirds of businesses will be keeping their trading levels with overseas territories at the same level – and this sensible ‘wait and see approach’ came across throughout the survey results.”
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