UK CEO, Edward Winterton, discusses the latest findings of Bibby Financial Services’s quarterly SME Confidence Tracker report.
On 18 April Theresa May called a snap election intended to secure a mandate for Brexit and extend the Conservative Party’s leadership for up to five years. Six weeks later, there was a hung parliament, with the Government losing its majority and subsequently turning to the DUP for support.
Such events have sent another wave of uncertainty through an already shaky economy.
In the wake of two elections and a referendum in little over two years, it is clear that much of the country has voter fatigue. More damaging, however, is the sense of nervousness and trepidation amongst SMEs.
Our SME Confidence Tracker report for Q2 reflects this mood.
Business confidence is down by ten percentage basis points compared with the start of the year. Bad debt – the value of unpaid customer invoices – has risen by more than 70% in the past 12 months. The annual amount written off by each business has now reached more than £20,000.
Investment decisions are being postponed and sales expectations, which rebounded in the first quarter of the year have yet again slumped. In Q2 2014 almost six in ten SMEs expected sales to grow over the months ahead. In Q2 2017 this had fallen to 40%.
SME attitudes towards Brexit appear to be changing too. In the first three months of the year two-fifths felt that Brexit would make no difference to their businesses. Nearly three-fifths (59%) now believe that uncertainty caused by Brexit is damaging to the Government’s ambition of a more productive and prosperous economy.
With this in mind, we must not lose our focus on regional growth and prosperity. Clarity and action surrounding the Northern Powerhouse and Midlands Engine initiatives are long overdue.
Such strategies, however, are currently on wobbly ground. Over a quarter of SMEs in the North are unaware of the Northern Powerhouse and half of those in the Midlands have not heard of the Midlands Engine. This demonstrates a distinct lack of awareness from the very audiences the Government wishes to engage.
It is vital that businesses in these regions see tangible benefits from the billions of pounds that have been earmarked, but this must start with awareness of the opportunities available to them.
While Brexit negotiations are clearly a priority for big and small businesses alike, it would be unwise for the Government to neglect the regional strategies on which it once placed so much emphasis.
By driving regional wheels of growth now, Theresa May’s minority Government, may stand a chance of preventing this summer’s uncertainty from continuing into the autumn and winter months.
Download the full SME Confidence Tracker report for Q2 here.