Less than one in four SMEs in Yorkshire expects to grow their business in the next 12 months, with many small firms wary of the economy’s prospects, a survey has suggested.
New data from the Close Brothers Business Barometer reveals that, while SMEs in the region are generally more optimistic about growth prospects than the rest of the UK, there remains substantial amounts of concerns about the health of economy at large.
The research suggests SME confidence has actually fallen back this year, with businesses now buffeted by a broad range of headwinds. Less than one in five Yorkshire-based SMEs in the latest barometer survey said they are confident about the steady recovery of the economy, with a further 23 per cent suggesting that the path back to prosperity will be slow, even though they feel the worst of the challenges associated with the economy are now behind us.
A quarter told Close Brothers they feared the economy could decline again, up significantly from the 16 per cent of SMEs that felt this way at the same time last year. In addition, a third actually warned they had not yet seen any true economic recovery, or even said they thought that the economy was worsening. Only 24 per cent felt this way at the same point last year.
Despite the pesmissim, a small, but significant seven per cent of firms actually expect to see their business contract over the year ahead. Crucially the outlook in Yorkshire’s small business communities appears to be more positive than the nation at large.
David Thomson, chief executive of Close Brothers Invoice Finance, said: “SMEs are deeply concerned about their prospects for the next 12 months. We know that many entrepreneurs and business leaders have exciting and ambitious plans for their companies, but fear their plans are not achievable against a backdrop of economic uncertainty and rising costs; in many cases, SMEs now feel even more pessimistic than they did this time last year.”
The causes of the conerns felt across the small business community are wide-ranging, from the uncertainty ahead of the EU referendum to the wavering state of the wavering global economy causing concern.
SMEs are also still wrestling with issues such as the higher costs of the national minimum wage, pension auto-enrolment and new tax regulation. Close Brothers Invoice Finance’s figures also indicate that SMEs can ill afford another 12 months of disappointing results, with many having achieved no growth over the past year.
“Our latest Business Barometer paints a worrying picture of the fragile state of confidence amongst Yorkshire’s SMEs today,” added Mr Thomson.
“After the financial crisis of 2008, we saw similar low levels of confidence in SMEs. We found it was the businesses that explored every possible funding option and ensured their enterprises were constructed on firm financial foundations that were able to ride out the uncertainty.”