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Cost Inflation Research ‘Encouraging For Small Businesses’

Rate At Lowest Level Since End Of 2009, According To Report


New research indicating that the annual rate of cost inflation for small and medium-sized businesses fell to its lowest level since 2009 is an “encouraging sign” for such companies, it has been suggested.

Aldermore’s latest quarterly SME Cost Inflation Report revealed  that the annual rate fell from 1.2 per cent to 0.7 per cent in the third quarter of 2013, with the reduction being driven by a drop in fees including those related to financial services and ‘sluggish’ growth in employment costs.

It also found that the average growing business expects to increase capital investment by two per cent in the next 12 months, while the average interest rates offered to small firms were found to have fallen back slightly.

Mark Stephens, group commercial director at Aldermore, said: “Cost inflation falling to its lowest level for nearly four years is a tremendously encouraging sign for SMEs across the country, and could provide a stimulus for many business owners to kick on and drive expansion in their business.

“The UK is expected to experience stronger growth than any other advanced economy in 2014, at around 2.7 per cent. This should make 2014 a brighter year for the UK's vast number of SMEs.”

Expert Opinion
This is just the latest in a series of reports to point the way towards a more positive future for both smaller firms and medium-sized businesses which are looking to kick on with expansion in the coming 12 months.

"It is also the latest indicator that conditions across the economy are improving and becoming much more favourable for companies which are seeking to take the next step in their development.

"With prospects looking bright for the year ahead, it is vital such companies begin to plan ahead and consider their strategy for the next few months. This will include ensuring that a robust support network is in place to provide advice on all matters, whether it is securing financial investment or legal issues related to expanding a workforce."
Steven Beahan, Partner