BREXIT HITS SMALL BUSINESS CONFIDENCE IN UNCERTAIN ECONOMY
Only a quarter of small business owners expect the economy to improve over the next 12 months, a fall of over 30 per cent from just three months ago, research finds.
The Smith & Williamson Enterprise Index reveals that optimism among small and medium-sized enterprises (SMEs) in regard to their own prospects over the next year fell by 27 per cent quarter on quarter, with one in two businesses pessimistic about their prospects in today’s economy. Guy Rigby, head of entrepreneurial services at Smith & Williamson says, ‘Confidence was badly affected by uncertainty in the lead-up to the referendum vote but responses submitted after the event indicate that belief in the economy and business prospects fell off a cliff.‘Only a third of respondents were optimistic about their own prospects after the referendum; a decline of nearly 20 points since the last quarter. Furthermore, only 15 per cent of business owners and entrepreneurs expected the economy to improve in the post-referendum landscape, a further decrease of 13.’
Overall, the results seem to reflect respondents’ concerns in the run up to the vote, together with shock at the unexpected outturn, Rigby adds. ‘In due course, and with the benefit of hindsight, this response may be seen as an overreaction. As we are already seeing, there will be some casualties, but change brings opportunity, so there is no reason why the majority of businesses can’t do well. ’The Smith & Williamson Enterprise Index, which measures the views and confidence of owner-managers and entrepreneurs in the UK, decreased dramatically over the past three months, falling from 111.4 to 97.7, putting it below its starting level of 100 in 2013. About a quarter of respondents submitted their surveys after the Referendum, accentuating an already negative result.
The number of respondents planning for growth or an acquisition declined 14 per cent in the run-up to the referendum result, with 60 per cent of respondents believing in the potential for either over the next 12 months. This number declined by a further 11 per cent for those who submitted their views after the referendum. Many respondents have said they have put hiring on hold, while less than one in two expect to increase headcount over the next quarter, a decline of close to 20 per cent from just three months ago. Rigby says, ‘The UK has long been a hotbed for international talent, so it is vital that steps are taken to ensure that this continues. Certainty needs to be given to those migrants who are living, working or intending to provide support to our vital SMEs and scale-ups. Unfortunately, due to current political instability, such certainty may be a few months, or even further, away. It is essential that a workable plan is developed and communicated by both our own politicians and those in the EU, he continues. ‘It’s time for the ‘moderate middle’ to step forward to protect both the UK’s and the EU’s interests and it is encouraging to see some clear leadership returning to government.
Belief in government support for private enterprise remained steady at 56 per cent, while post-Referendum responses highlighted renewed belief in this support with a three point rise. Respondents’ opinions on the adequacy of the talent pool reached record highs in the quarter with more than 51 per cent believing there are sufficiently educated or trained staff available to meet their needs. ‘Despite the economic negatives, and the challenging state of affairs, it does appear that many business owners believe there is the potential to bounce back in a positive way,’ Rigby says. ‘For the first time, the availability of suitably trained talent appears to be on a gentle upward curve and, with measures such as the Apprenticeship Levy being introduced in 2016, this could be set to continue. ’Prior to the referendum there had been a slight upturn in expectations surrounding exports as 61 per cent of businesses believed that turnover would increase. Rigby says that, in what may have been a slight ‘knee-jerk’ reaction to the referendum, this positivity receded as 14 per cent fewer expected any export growth. ‘However, the fall in sterling should give a boost to our exporters as our goods and services become cheaper overseas,’ Rigby says.
http://smallbusiness.co.uk/brexit-hits-small-business-confidence-uncertain-economy-2533649/