SMEs Are Expected To Invest In Their Operations This Year

Small and medium enterprises (SMEs) are keen to expand and more firms are increasingly likely to invest in 2014.

This is according to HSBC's latest Business of Growth report, which forecast that an extra 7.1 per cent of businesses would make a fixed investment this year when compared with 2013. In March 2013, the bank predicted this figure would stand at just 3.6 per cent, which highlights the scale of the recovery that has been made in the past 12 months.

Analysts assessed the UK's recent economic performance and concluded that 2014 has the potential to be a turning point for small organisations.

Amanda Murphy, head of business banking for HSBC, commented: "Ambitious British businesses are saying they are going to invest this year and get on with growing."

Many SMEs have found it difficult to gain access to credit in the past few years and this has severely hindered their attempts to expand.

However, the study found that the number of startup enterprises securing finance from lenders has risen of late, with HSBC reporting a 16 per cent year-on-year increase in new-term lending in the first two months of 2014, while the overall value of loans rose by 37 per cent over the same period.

HSBC said that although the UK's emergence from the recession has been a long, drawn-out process, the country has now enjoyed six to nine months of strong, sustained growth.

Gross domestic product (GDP) is predicted to expand by an average of 2.7 per cent this year, according to the bank, which would be the best performance since 2007.

The forecast is likely to change for the better in the coming months too. The bank pointed to the fact that the International Monetary Fund (IMF) recently upgraded its GDP growth estimation for 2014 to 2.9 per cent
In 2013, the UK outperformed most European economies and the IMF also thinks the nation will have the fastest growing economy in the G7 this year.

Expert Opinion

It is fantastic to see that businesses are increasingly confident in their prospects for the coming months, with this research being just the latest in a long line of studies to indicate that the future is looking bright for businesses of all sizes. <br/> <br/>"Smaller firms will be in a particularly strong position due to these developments and will no doubt have their eyes on the benefits that investment could bring, in terms of expanding their offerings or even opening avenues to trade across other countries. <br/> <br/>"However, we cannot stress enough the need for small businesses to ensure they have the right network of third parties at their disposal to ensure they are prepared to take advantage of the opportunities which may arise. <br/> <br/>"Central to this legal advice, which will be invaluable on employment issues such as growing a workforce and on real estate matters in terms of finalising deals for new space to occupy." Steven Beahan - Partner