Since the country voted to leave the European Union (EU) over a year ago, businesses have faced a prolonged period of political and economic uncertainty.
Accounting for more than 99% of UK businesses, small- and medium-sized enterprises (SMEs) have a crucial role to play in creating jobs and powering the economy at both a national and regional level and it’s vital that this sector is supported to ensure future growth.
According to our SME Growth Watch research – the annual report we commissioned with the Centre for Economic and Business Research (Cebr) – SMEs in the top 10 cities in the UK are forecast to contribute £241bn to the economy by 2025, a 19% increase on the £202bn contributed in 2016. Over the same time period, the research predicted that the number of SMEs will increase by 21% to more than one million, with the number of people employed by this sector also rising by 21% to over 4.8 million.
This is positive news. However, in order to ensure UK SMEs meet their full potential and expand at the rate forecast in our report, we need the government to keep the spotlight on smaller companies and to help create the conditions that will support their continued growth.
Boosting business confidence will be key in the months and, indeed, years ahead as we exit the EU. With this in mind, it is concerning that our research showed there had been a drop in business confidence, with 44% of respondents stating they were optimistic about the long-term economic prospects of the region they operated in, compared with 58% in 2016.
Our study also revealed that more than a third (34%) of SMEs felt their business growth expectations had decreased following the decision to leave the EU, compared with 10% who said that growth expectations had increased. This shows how important it is to provide certainty about the post-Brexit business environment as soon as possible.
On the positive side, our research showed that 37% of SMEs said they were likely to invest in expansion in the coming year, which indicated that smaller firms are set to continue to drive economic growth. We believe this is where specialist banks can help.
Specialist banks have an important role to play in providing finance to the SME sectors in which they operate; sectors which may have been overlooked by the traditional high street banks. The increased range of banking options now available should mean that SMEs are more able to find funding that meets their specific requirements and business needs. By working together, we believe we can support SMEs through this period of uncertainty and help build strong foundations to achieve forecasted future growth.
For more information, download part one of our SME Growth Watch 2017/18 report.
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