UK CEO, Edward Winterton, discusses the findings of BFS’s latest SME Confidence Tracker report and what the General Election means for SMEs.
In the SME Confidence Tracker report for Q4 2016, it was noted that there were renewed fears that stagflation may be around the corner due to rising input costs as a result of a weakened pound. SMEs seemed rightly concerned with confidence falling to its lowest level since Q1 2014.
Yet just three months later, our research paints a different picture. Our latest findings reveal that nearly half of SMEs surveyed between January and April expect sales to increase over the next three months – the highest level since the EU referendum last summer.
On the subject of Brexit, SMEs seemed to have started to focus their gaze back to business. Many were indifferent when asked how the process would affect them. Only a third (34%) told us that Brexit would have a negative impact on their business and 42% said it would make no difference at all.
The anticipation of increasing sales was matched by an ambition to grow over the next twelve months. Over half (58%) of SMEs told us they plan to expand their business, while 38 per cent said they plan to diversify into new sectors and product areas in 2017.
This seemingly renewed vigour amongst the UK’s smallest businesses in Q1 could, however, be short lived.
On 18 April, Theresa May, announced that a snap General Election would take place on 8 June, introducing further uncertainty for UK businesses over the months ahead.
While SMEs have become accustomed to political change following two referendums and a general election in the last three years alone, the Prime Minister’s announcement will yet again shift Government focus away from the economy.
The election, however, does provide an opportunity to further debate the UK’s post-Brexit future, and the implications – both positive and negative – for SMEs.
This debate should include how to bring better balance to the economy including leveraging the Midlands Engine and Northern Powerhouse proposals to drive regional growth. It should focus on how we can start to close skills gaps, boost international trade, encourage innovation and ensure that we have infrastructure to support future growth.
While SMEs and business groups alike will be concerned over the unsettling effects of another political vote, the Prime Minister clearly sees this as a chance to lay to rest the Brexit debate, once and for all.
In the meantime, we will watch closely to see how the SME community reacts and whether the resurgence in confidence witnessed in the first quarter of 2017 can be maintained in the face of yet another political campaign in the UK.