The Analysis Editor’s Letter


Over half of SMEs predict UK recession as Brexit bites


Stephen Kiely Editor, CCRMagazine stephen@ccrmagazine.co.uk


Amidst the continued political uncertainty that currently plagues the UK – and looks set to do so for the foreseeable future – it is perhaps unsurprising that businesses are starting to predict serious economic consequences. It has long been the case that consumers


and businesses have been putting off making major investment decisions until they feel themselves to be on a stronger footing in terms of being sure what the future will bring. Now, more than half (57%) of small and medium sized enterprises (SME) believe the UK economy will fall into recession this year, according to the latest SME Confidence Tracker from Bibby Financial Services. In line with this belief, confidence among


SMEs has declined by 5.6 points year-on- year, with UK businesses experiencing their least confident start to a new year since 2014. This has had a knock-on effect on


investment decisions, with the average amount of capital SMEs plan to invest in their business falling for the fourth consecutive quarter – from £103,648 in the first quarter of 2018 to £64,600 in the first quarter of 2019. This drop comes as an increasing


proportion of businesses say they are holding back investment due to the uncertain economic environment within the UK, increasing from a quarter (26%) in the fourth quarter of 2018 to a third (33%) in the first quarter of 2019, the highest level since 2015. A similar proportion (30%) cite that uncertainty arising from the


UK’s exit from the EU is holding them back, indicating there has been an impact on UK business investment because of Brexit. Edward Winterton, UK chief executive of 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,


May 2019


observe a seasonal bounce in SME confidence at the start of a year, as businesses begin with renewed optimism


ahead. We


If SMEs are the warning lights of our economy, this quarter signals to us that


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.” The data found that SMEs are calling for


further 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. Mr Winterton added: “There is often talk


they see trouble typically


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.” Operationally, SMEs are facing other


challenges too, with almost a fifth (19%) telling us that rising costs were their biggest challenge. While others believed increased competition from other firms (16%) and late payment (16%) were their biggest threats. l The future of the UK economy will, no doubt, be one of the major issues up for


discussion during the Round-Table Debates at the all-new CCRInteractive: the Big Debate at the Grange St Pauls, London, on 8 October. Are you tired of hearing the same speeches time and again? Are you ready to gain and share the knowledge you need in Round-Table Debates? CCRInteractive will give you the opportunities you need. To find out more about being part of this Revolution in Events,


contact Gary Lucas at gary@ccrmagazine.co.uk or 07785 268404. Enjoy the magazine!


www.CCRMagazine.com 3


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