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Leaders of small and medium size businesses are increasingly confident about prospects for the 12 months ahead after two tough years of soaring costs and high interest rates, a new survey reveals today.
Almost nine of out 10 SME owners and senior executives polled said they were confident about the coming year, with more than a quarter expressing “extreme confidence”. Only 4% of those asked said they were not feeling confident at all.
The research, carried out on behalf of specialist bank Shawbrook, also found that almost half of SMEs had seen growth over the past 12 months, up from 29% in last year’s survey.
Increasing profitability is the key priority for SMEs in 2024 (52%), with improving productivity (51%) and managing rising costs (50%) also close to the top of the list.
Business owners are considering how to expand and develop their business.
A third are looking at digital transformation of their business and 29% are considering expanding into new markets or exporting.
Neil Rudge, chief banking officer for commercial at Shawbrook, said: “With the inflation rate settling back to normal, and a rate cut expected from the Bank of England later this summer, SMEs are now focusing on the future. The last few years have been challenging, so it’s encouraging to see confidence return, with an overwhelming number of business leaders feeling confident for the future.”
It is the latest in a series of surveys of business leaders, investors and financial firms to point to growing confidence in the UK’s prospects, after a prolonged period of turbulence and economic stagnation.
Yesterday City investment bank Peel Hunt said in a research note that the UK was in a far better position after “years of damaging uncertainty” since the Brexit vote in 2016.
Wall Street giant Bank of America said this week that the pound is set to be one of the world’s top-performing major currencies this year amid expectations of “above trend growth” in the UK economy and slower interest rate cuts. BoA said the pound could hit $1.41 by the end of 2025, after reaching a 29-month high of $1.323 last Tuesday.
However, the upsurge in business confidence since the general election in July comes amid concern about Labour’s proposals for reforming workers’ rights, which employers fear could hold back recruitment.
Deputy PM Angela Rayner and business secretary Jonathan Reynolds were today hosting a summit of major private sector employers including BT, Sainsbury’s, McDonald’s and Octopus Energy to discuss the proposals.
They include plans to make work more family-friendly — such as a “right to switch off” to limit out-of-hours contact — as well as giving staff more rights to demand a four-day week.
Ministers plan to update business leaders on what to expect from the reforms and will seek to reassure them that they will be involved “every step of the way” as the rules come into effect.
The Government has said that an employment rights Bill will be tabled within its first 100 days in power, which ends in October.
Neil Carberry, chief executive of the Recruitment and Employment Confederation industry group, said: “We are still waiting to see what the path will be. That is creating concern from businesses because we don’t have the specifics, so there’s some ‘wait and see’ going on with hiring.”