Brexit uncertainty too damaging for the economy, say UK SMEs
- SMEs see cost of doing business and access to talent as key challenges facing the UK
- Business confidence is down by ten percentage basis points compared with the start of the year
- Research conducted on the eve of the first anniversary of the UK’s decision to leave the European Union (EU)
UK SMEs say uncertainty brought about by Brexit is the biggest challenge facing the new Government, according to the latest SME Confidence Tracker from independent funder, Bibby Financial Services (BFS).
Nearly three-fifths (59%) of SMEs stated that uncertainty caused by Brexit is damaging to the Government’s ambition of a more productive and prosperous economy.
The research, which provides an insight into the minds of SMEs across the UK, was conducted throughout the recent General Election and commenced on the eve of the first anniversary of the UK’s decision to leave the EU.
SMEs also voiced concern over the cost of doing business, which was cited by nearly half (46%) of respondents. Research reveals that SME owners have reacted to such cost pressure by establishing new supply chains. Finding new suppliers was the third largest (32%) area of investment in Q2, behind staff training (37%) and office equipment (33%).
Company bosses jointly stated (46%) that the UK workforce lacks the skills needed to enable competiveness and raises questions about how the UK will fair in accessing talent once it has officially exited the EU.
Figures also reveal that business confidence is muted with less than half (40%) expecting sales to increase over the next three months. This represents a 10 percentage basis point drop on Q1 2017, when nearly half (49%) of SMEs anticipated increasing sales.
As part of the survey, SME owners selected their priority demands for the new Government:
- Nearly a third (29%) want the Government to prioritise lower business rates for small businesses.
- One in five (20%) asked the Government to negotiate a new trade deal with the EU.
- 15% want the Government to establish a trade deal with the EU under Word Trade Organisation rules.
Commenting on the findings Edward Winterton, UK Chief Executive Officer at Bibby Financial Services, said: “Financial markets don’t like uncertainty, but neither do small and medium sized businesses. We have seen a strong decline in business confidence over recent weeks and we are now starting to see investment decisions being delayed, which will have further impacts on the economy.
“Our research in Q1 showed that two-fifths of SMEs felt that Brexit would make no difference to their businesses. However, our latest findings reveal a significant step-change in attitudes amongst UK SMEs. Many would now like to see the Government get on with the job of negotiating a deal that works for both the UK economy and local business communities alike.
“Business rates are also a key priority for SME owners. We would welcome any move to reform business rates, which threaten our independent high street shops. This has been an ongoing concern for SMEs for some time and needs to be addressed effectively if we are to maintain our standing as a great place to do business.”