SMEs expect a recession
Over half (57%) of UK SMEs are expecting the UK economy to fall into recession this year, Bibby Financial Services research found.
Bibby’s SME Confidence Tracker found that a number of SMEs are holding back in investing in their business, with the amount of capital they planned to invest falling for the fourth consecutive quarter – from £103,648 in Q1 2018 to £64,600 Q1 2019.
Edward Winterton, UK chief executive, Bibby Financial Services, said: “If SMEs are the warning lights of our economy, this quarter signals to us that they see trouble ahead.
“We typically observe a seasonal bounce in SME confidence at the start of a year, as businesses begin with renewed optimism. This year, the bounce was lower than ever before, highlighting how Brexit uncertainty is taking its toll on UK SMEs.
“Political uncertainty is acting as a brake on the economy. It needs to end. Regardless of whether you supported leave or remain, Brexit has been an agonisingly slow process resulting in our SMEs pulling back on investment when our economy needs stimulus to grow.”
An increasing proportion of businesses are holding back investment due to the uncertain economic environment within the UK, increasing from a quarter (26%) in Q4 2018 to a third (33%) in Q1 2019, the highest level since 2015.
A third (30%) cite that uncertainty arising from the UK’s exit from the EU as holding them back.
SMEs want more support from the government to help them through Brexit.
Over two thirds (68%) would like the government to introduce tax breaks for businesses, while almost two thirds (65%) want lower business rates, and half (50%) think the government should ensure that tariffs on goods to the EU are avoided.
Winterton added: “There is often talk of protecting the City of London from Brexit, but our SMEs need protection too. I hope the government will act to reduce the impact of Brexit on UK businesses.”