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SME’s divided on post-recession outlook

Robyn Hall

August 28, 2012

The RSM Tenon Business Barometer, a quarterly survey carried out by YouGov amongst senior management in small and medium sized enterprises, showed that 45% of SMEs thought that prospects for their business would improve post-downturn, whilst a slightly lower 44% thought it wouldn’t.

Although the same number of SMEs in the North and South (42%) agreed that they felt the outlook for their business was good, the North/South divide became more apparent amongst those that thought the outlook wasn’t so positive. Over half of the SMEs in the North (54%) said that they weren’t confident that things would improve for their business, compared to 41% in the South. SMEs in the Scotland were the most positive about their future, with 58% – the highest in the survey – saying that they were confident things would improve.

John Abbott, RSM Tenon’s Head of Clients and Markets, said: “I don’t think we should be surprised that SMEs are still unsure as to the outlook for their business.

“The threat of a double-dip recession and the continuing economic turmoil in the Eurozone will continue to make them concerned for the future, and I think it may be some time before we start to see any serious confidence coming back into the SME market.”

One of the SMEs not confident about the future is robotic systems integrator Mechatronic Systems in the Midlands, where RSM Tenon’s Business Barometer results showed that nearly half of SMEs in the regions (46%) felt that the future didn’t look positive for their business.

Richard Evans, managing director for Mechatronic Systems, said: “Our business is very much influenced by the capital equipment buy cycle that precedes an upturn in our customers output, and this has been particularly strong in the automotive first tier supplier market place.

“This capital investment cycle turns into production, and as new models hit the assembly lines, this triggers a down cycle for us. However there continues to be massive investment in more new models in the West Midlands which is benefiting the equipment supply side as well as production suppliers, and we are hopeful of another twelve months demand.

“Over the past year we have had to play banker and take significant commercial risks of offering up to months of credit, and whilst we have had some help from our bank, we have also had to adopt other innovative ways of financing the opportunity.

“We have recently lost contracts to European competitors and we also see other sectors holding back on investment. This, combined with a slowdown in demand and output, will affect us in the medium term despite actively diversifying and seeking fresh opportunities. I think we’ll see demand dropping further in the coming year, and so I’m afraid I agree with the SMEs that said the future post-recession will not be so bright.”


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