Only a third of SMEs predict 2016 first quarter growth


A slowdown in growth and uncertainty in the wider economy has seen confidence amongst SMEs decline sharply over the past two years, according to a new survey.


The latest SME Confidence Tracker by invoice finance provider Bibby Financial Services found that just over a third (36%) of small and medium businesses in the UK expected to see growth in the first quarter of 2016. This represents a 10% drop from the final quarter of 2015 and is a marked difference from the opening quarter of 2014, when 64% of SMEs reported that they expected to see growth.


Businesses in Scotland were particularly downbeat, with only 29% of SME owners and decision-makers saying they expected their businesses to grow within the first three months of the year.


Almost a fifth (17%) of businesses across the UK actually expected to see their sales decrease over the first three months of 2016. For some this could lead to serious financial difficulties and could even lead to business insolvency in the worst instances.


Unsurprisingly this lack of confidence is reflected in UK businesses’ investment plans, with 35% of SMEs saying they had no plans to invest during the first quarter.


Recent data from the Office for National Statistics (ONS) showed that growth in the UK economy slowed towards the end of 2015, falling from 0.5% to 0.4% in Q3. Almost a third (29%) of small business owners and decision-makers listed an uncertain economic environment as a reason to hold off investment. This was up from 21% in the previous quarter.


Of those that were planning to invest, the majority of businesses were focusing on using that investment to maintain “business as usual” activity, including replacing or updating outdated equipment and keeping up with competitors. The top planned investment was in existing staff and new hires but even so, only one in ten respondents listed “ensuring the business attracts and retains the best talent” as a primary reason to invest.


By Phil Smith


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