SME Index Shows Strong Q1 Growth

Latest Bibby Financial Services SME Index Shows Strong Growth Levels For The First Quarter Of 2014


Steven Beahan, Partner | +44 (0)114 294 7868

Performance among SMEs was stronger than expected in the first quarter of 2014, according to Bibby Financial Services.

Executives at the firm surveyed the growth of their 4,000 clients and discovered the strongest performance of any first quarter since the first quarter of 2008 - before the worst of the global financial crisis.

David Postings, UK chief executive at Bibby Financial Services, said that the results are a "clear indication" that the country is emerging from the recession and has landed on its feet after years of austerity.

"We have seen already that the Bank of England’s Monetary Policy Committee has upgraded its forecast for growth in the UK during the first quarter, and we would expect the [next] official estimate of GDP to reflect the positivity the Index has highlighted," he added.

Manufacturing was by far the strongest sector, with growth recorded at the second strongest level since records began at Bibby.

But the picture was not positive across the entire UK economy, with construction companies reporting their lowest level of activity since the first quarter of 2009, reflecting what Bibby calls "growing unease" about the longevity of government schemes designed to stimulate the sector.

However, growth was strong in the last part of March after chancellor George Osborne announced the Help to Buy scheme will remain in place for the next decade - indicating the second quarter could see a more positive performance.

The transport sector posted a mixed result, down on 2013's higher than expected benchmark, but up on 2012 figures.

Mr Postings argues that banks need to provide more funding for SMEs if the UK's growth is to continue in the long-term, as currently many small firms struggle to get the money they need to expand.

"At this stage of recovery, we need to nurture and stimulate activity - not prevent it," he added.

"The banks obviously provide a vital service to the UK economy but too often businesses are pushing against closed doors."

Expert Opinion
It is fantastic news to see that small businesses are performing strongly, with these figures indicating that now is a prime time for entrepreneurs to seriously consider taking steps to make their ambitions and plans a reality.

"However, without wanting to dampen enthusiasm for the improving economy, it is wise for small businesses to bear in mind potential growing pains they could face as their operations develop and the need to take on new staff, take up new commercial premises or consider key deals becomes more apparent.

"The general view is undoubtedly that the economy has turned a corner and SMEs have an important role to play in ensuring that this positivity continues. We would urge small businesses to get the right support around them so they are prepared for everything the future may hold."
Steven Beahan, Partner