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SME Confidence Surges As Economy Grows

Survey Puts UK Business Sentiment At 22-Year High


Fergal Dowling, Partner | +44 (0)121 214 5476

British businesses are as confident as they have been in 22 years, a new survey has indicated.

The bi-annual Business in Britain report, published by Lloyds Bank, showed that companies in the UK are more confident about the future than they had been at any time since 1992, with the proportion of firms feeling positive about their prospects being 53 per cent higher than the number feeling downbeat. 

Among the positive indicators were higher net balances of sales, orders and profits. SMEs are tipped to do particularly well in the coming months, as the highest increase in confidence - 49 per cent - was in firms with an annual turnover of less than £1 million. These companies also saw a 21 per cent rise to 44 per cent in their net balance of expected profits.

The survey showed that this increase in optimism applied to every region and 22 per cent of firms anticipate taking on more staff in the second half of 2014. By region, the West Midlands fared best overall, coming top for sales, orders and anticipated increases in staffing over the next six months.

However, despite these factors the region with the highest confidence level was the south-west, followed by the north-east and Yorkshire, while the north-west was lowest, albeit still more confident than before. Wales and London were also below the national average.

Lloyds' SME and mid markets managing director Tim Hinton remarked: "The survey indicates that business optimism about sales, incoming orders, exports and profits has continued to rise over the last six months, with some indicators climbing to record highs. These gains chime with a broader pick-up in economic activity.

"These recent improvements also help explain an accompanying rise in confidence for the second half of 2014."

By sector, it was manufacturing firms that were identified as being the most confident with a net balance of 59 per cent - and this positive outlook is matched by other survey data.

The Markit / CIPS Purchasing Managers Index for June has indicated a strong reading of 57.5, with order demand strengthening from May and rising SME headcounts prompting a 39-month high in job creation rates.

Expert Opinion
It seems at present like barely a week goes by without another study being published outlining rising confidence across the business world. This all spells very positive news for a huge number of small businesses, which will be well placed to take advantage of numerous opportunities which could arise as a symptom of this increase in positivity.

"However, SMEs cannot forget that there are many growing pains which can emerge as operations begin to develop, whether it is as a result of taking on new staff, agreeing new deals with other firms or looking to move to larger premises.

"Entrepreneurs and small businesses need to bear the importance of legal advice in mind when it comes to their future, as a failure to consider this could lead to compliance issues and further regulatory headaches down the road."
Fergal Dowling, Partner

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