SME health at highest level for 18 months
Small businesses enjoyed the best operating environment for 18 months during the second quarter, according to the latest SME Health Check Index.
The Index from the Centre for Economics and Business Research, done in association with CYBG PLC, the owner of Clydesdale and Yorkshire Banks, shows a reversal in fortunes from the first quarter.
Current health levels for UK SMEs are therefore on par with what was recorded throughout 2016, when steady improvements were noted.
According to the Index, six of eight key performance indicators showed improvements, with the score jumping 12 points to 58.9 overall.
A score of 100 overall indicates maximum positive conditions in a sector across the indicators being used.
Decreasing bankruptcies and increased lending to SMEs are the main factors behind the progression, while business costs stagnated during the second quarter.
Despite the positive figures, the Index also notes that business confidence has slumped, although it remains higher than at any point during 2016.
The SME Health Check Index measures a number of factors that influence small firms, from business rates and confidence to employment, capacity, bankruptcies, lending, gross domestic product and revenue.
David Duffy, CEO at CYBG said the results should be greeted with “cautious optimism” and warned that there is “no room for complacency”.
He added that the overall health of British firms will have a key influence on UK economic growth, competitiveness and productivity, while the Northern Powerhouse and Midlands Engine government strategies will play a pivotal role in delivering success.
The Index shows that the North East has improved to lead the regional rankings, although confidence and capacity in Yorkshire and the Humber has taken a knock – the only one of nine English regions to record a decline.
Lending to small firms increased during the second quarter which helped to boost growth aspirations – a range of alternative finance options also exist to aid those looking to grow or consolidate their existing positions.
If you’re unsure how a business can reach its potential, corporate advisory services may also be able to provide assistance.
By Phil Smith