OPTIMISM among small- and medium-sized enterprise (SME) manufacturers has deteriorated for the first time in more than a year, amid concerns over labour shortages, the Confederation of British Industry claims.
The CBI SME trends survey, released on Wednesday, found 13 per cent of SME manufacturers said they were more optimistic about the future, while 19 per cent were less so, giving a percentage balance of minus six per cent.
The poll of 374 SME manufacturers found 26 per cent cited labour shortages as a limiting factor on investment, the highest on record.
Overall, more companies said their orders and output had gone up rather than down but they are expecting demand to fall over the next quarter.
“The latest survey suggests mixed fortunes for our smaller manufacturers,” Alpesh Paleja, principal economist for the CBI, said.
“While growth in new orders has held up and headcount has risen strongly, output growth has lost some steam over the last quarter. Coupled with ongoing pressure from labour shortages, it’s understandable that optimism among manufacturers has fallen.
“The chancellor should use the Budget to fire up our factories by reforming business rates, and setting out a clear plan to bring the UK’s industrial strategy to life.”
Meanwhile, separate research by distribution firm Citysprint has also identified a drop in confidence among SMEs.
CitySprint’s fifth annual survey of more than 1,000 SMEs found 77 per cent are as confident or more confident about the future of their business compared with 12 months ago. This figure is down from the 85 per cent recorded in the previous survey.
Almost half, 43 per cent, said they lack confidence in the government’s ability to protect their business from the impact of Brexit.
When asked what support they would like to see for their business from the government, reducing VAT or lowering taxes came top of the list, cited by 45 per cent.
Rolling back austerity and creating a fund to support investment in small businesses ranked next, with 29 per cent saying they would like to see a transition deal with the EU to bridge the UK’s exit.
The research also found that two thirds of respondents have not made specific plans to prepare their business for Brexit.
“Whatever difficulties the future holds, it’s ‘business as unusual’ for the UK’s SMEs,” Patrick Gallagher, group chief executive of the CitySprint Group, said.
“They have more than weathered the economic ups and downs of recent years, and by working with each other, they will no doubt continue to adapt to the times. Smaller enterprises are both highly agile and deft at reinventing themselves and the way they work to suit the times. It’s their biggest advantage.”