Future Looks Bright For SMEs – New SME Barometer
- 87% of UK SMEs expect to be trading in a year
- More than half of UK SMEs expect profits to increase
- 60% of UK SMEs intend to invest during the next year
87% of UK SMEs expect to be trading in a year whilst a further 68% feel positive about the UK’s economic outlook with more than 56% expecting profits to increase, according to a new survey of SMEs in the UK and Nordics by leading SME accountancy firm Azets.
In addition, 56% of SMEs expect to recruit more staff during the next year and 60% intend to invest in the business. 73% of those SMEs with staff on furlough intend to return all of their staff from furlough.
However, 60% of businesses in Scotland and 59% in the North of England feel positive about the UK’s economic outlook compared to 71% in London and the South.
As the UK went into lockdown last year, the government stepped in to support businesses with 71% of SMEs feeling well supported by the policy programme.
Peter Gallanagh, North Regional CEO of Azets, said:
“There is a robust level of optimism across the SME community and the investment and recruitment intentions are very encouraging. The disparity in optimism between Scotland/the North and The South reflect the heavy weighting towards the service sector in the South, which is showing stronger and faster signs of recovery. Hopefully recovery in confidence in Scotland and the North will accelerate as the economy strengthens across the regions, entrepreneurs start to invest and employment increases.
“Clearly there are wider challenges with shortages of skilled labour, soaring raw material costs and the threat of inflation. SMEs will be adjusting their business models and considering innovative ways to reduce costs and their dependence on single supply chains. This is sound future-proofing and will help ensure they are well placed to capitalise on growth opportunities.”
Other key findings from the report:
- Financial health, adapting their business models and employee wellbeing were ranked as the top three priorities by UK SMEs.
- The economy, Covid-19 and competition were the top three threats with Brexit a key issue for SMEs outside London and the South-East.
- Only 20% intend to borrow over the next year.
- Top opportunities are business models, the economy and international trade
- 34% of UK SME business leaders say they have a poor work/life balance
Chris Horne, Group CEO of Azets, concluded:
“Our first SME barometer was conducted against an unusual backdrop. After a year of deep crisis and upheaval; with the vaccination programme accelerating and lockdown restrictions beginning to ease, the prospect of economic recovery feels within our grasp. The research highlighted a stubborn optimism among SMEs and a pragmatic awareness of the need to adapt to the ‘new normal’ post-covid.
“The biggest opportunity and biggest threat for SMEs is using technology and flexible working to adapt their business model. Those who get this transition right will be in a better position to survive and thrive. Given the importance of ensuring that the SME sector continues to prosper, these findings point to areas where further government policies are vital in delivering the support businesses need right across the UK.”
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