CONFIDENCE among small and medium-sized enterprises in Yorkshire and the Humber has soared, according to a major new survey.
Research conducted by Zurich, a global insurance company, found that 36 per cent of SMEs in the region believe the economic situation will improve in this quarter, compared to 38 per cent nationally.
Across the UK, the perceived level of business risk faced by smaller companies has fallen. Only 28 per cent of SMEs think their firm faces more risk now than in the last financial quarter, compared to 35 per cent who said the same in the first quarter of the year. In Yorkshire and the Humber, this figure is just 23 per cent.
The Zurich SME Risk Index is based on polling of 500 decision-makers from British SMEs by YouGov.
Richard Coleman, director of SME at Zurich Insurance, said: “With many official figures suggesting a return to economic growth in the whole UK economy, it is encouraging to see a shared optimism among Britain’s small and medium-sized businesses. SMEs are building in confidence and reinvesting in their business, suggesting a belief that these economic green shoots are here to stay, for the moment at least.
“A key part of being a successful small business owner is the ability to take measured risks, and this is what many SME owners are regaining the courage to do.”
Across Yorkshire and the Humber, one in four SMEs see less risk compared to last year.
Richard Blackburn, managing director at Halifax-based insurance broker Wilby, said: “It’s great to see an encouraging boost in confidence among the small business community in Yorkshire. The region showed particular strength in business investment last quarter, with almost two-fifths of SMEs saying that they were able to put money back into business assets and operations.”
According to Zurich, in the last financial quarter, 28 per cent of SMEs across the country invested in assets and operations, compared to just 19 per cent at the beginning of the year. In the Yorkshire region, 38 per cent did the same in the most recent quarter. Businesses here also reported a 41 per cent growth, against a national figure of 38 per cent.
Mr Blackburn said: “Levels of SME growth are also on a par with areas in and around London, proving that Yorkshire continues to be a vital part of the UK’s economic make up. It’s important now that we continue to put small business first in the region, offering the right financial support and advice.”
While the situation is looking up, concerns remain about some business risks. Anxiety over workforce challenges, such as the availability of skilled employees and workforce capacity, has increased nationally in the last quarter, from 37.89 to 41.86 points. Similar concerns in Yorkshire and the Humber are rated at 39.91 points.
Mr Coleman said: “Of particular note is that workforce capacity and talent availability challenges are now becoming front of mind for many SMEs. Whilst this remains a growing area of long-term risk for small businesses, this bodes well for long-term improvement in UK unemployment and job creation.
“As the economy improves and competition increases, businesses need to maintain a strong focus on retaining the best talent, or risk losing them to forward-thinking competitors.”
Fewer UK businesses polled now compared to three months ago had to reduce prices, reduce wages, diversify the business offering and comprehensively restructure the business. Decision makers are also suggesting they are more confident that they could cope with customer losses, with less than one fifth saying they would need to significantly downsize if they lost their two largest clients in the next year, compared to nearly a quarter in quarter one. Alexandra Jones, chief executive of Centre for Cities, a think tank, said: “Small and medium-sized businesses are the lifeblood of the UK’s economy. Government must recognise the importance of local economies to SME performance and resilience and ensure that local partners, including Local Enterprise Partnerships, have a clear role in delivering national business support policies.
“High-quality, evidence based Local Growth Plans will be critical to helping UK cities navigate the bumpy road of recovery, while support from national organisations such as UKTI, as well as local partners will be vital to helping SMEs diversify their customer base and even move into exports.”
The statistics are taken from Zurich’s quarterly SME Risk Index covering the period from April to June.