THE health of small and medium-sized enterprises (SMEs) in Yorkshire improved in the first quarter of 2018, according to a new study.
The research, which was carried out by CYBG in partnership with the economic consultancy, the Centre for Business and Economics Research (Cebr), concluded that firms in Yorkshire are more optimistic about the future than their counterparts in every other UK region, apart from the East Midlands.
The SME Health Check Index provides a score between 0 and 100 to indicate the strength of the regional economy.
The report revealed that business health in Yorkshire has risen to a score of 43.3, which is an increase of 4.1 from the fourth quarter of 2017, but still below the national average for the first quarter of 47.
The report said: “The improvement in business sentiment is likely to reflect the return to positive real wage growth early in 2018 which should help to prop up consumer spending.”
However, the report also concludes that the contribution of new SME workers to the UK economy is expected to drop by more than half over the next five years, raising concerns about potential problems in the post Brexit world.
The report added: “SMEs’ new hires in each year between 2010 and 2017 added an average of £10.9 billion per annum to the UK’s gross value added (GVA) figure.
“However, with unemployment already at historic lows, SME hiring is predicted to fall in the coming years, as the wider economy slows down and wage growth begins to accelerate.
“It is forecast that the contribution of new SME hires to GVA could more than half to £4.8 billion a year between 2017 and 2022.”
Gavin Opperman, the group director for customer banking at CYBG, said: “Despite the concern around an SME hiring slowdown, our SME Health Check Index does show signs of optimism and, after five consecutive quarters of decline, our headline reading rose in the first quarter of 2018. However, it’s still a mixed picture and the index is well below the level we have seen previously.
“We are pleased that SMEs are hiring and business confidence has improved in most UK regions, despite the slowest quarterly GDP growth in more than five years.
“Lending has also increased, which is positive for us as we are committed to supporting SMEs.”
Mr Opperman added: “However, the projected slowdown in SME hiring is a wake up call. SMEs’ contribution cannot be underestimated. We must understand the pressures facing them and provide the right environment and support to help them flourish and continue being a major employer of the UK’s workforce. In particular, we must give our small firms the access to talent they need post-Brexit and address how these firms can be incentivised to invest in skills.”
An increase of around 57,000 people in employment helped to boost Yorkshire’s SME Health Check Index score in the first quarter, according to the study from CYBG and the Centre for Business and Economics Research.
The SME Health Check Index combines various statistics and indicators to evaluate the health of the business and macroeconomic environment within which SMEs operate.