Brexit

57% of SMEs expect UK recession this year




Over half of SMEs (57%) believe that the UK economy will fall into recession this year, according to the latest SME confidence tracker by Bibby Financial Services (BFS).

The independent financial services provider also found that confidence among SMEs had declined by 5.6 points year-on-year, with businesses experiencing their least confident start to a new year since 2014.

Other key points include:

  • the average amount of capital SMEs plan to invest in their business has fallen from £103,648 in Q1 2018 to £64,600 in Q1 2019
  • the number of businesses holding back investment — due to the UK’s uncertain economic environment — increased from 26% in Q4 2018 to 33% in Q1 2019, the highest since 2015
  • similarly, 30% of SMEs felt that uncertainty arising from the UK’s exit from the EU was limiting their investments
  • 19% of SMEs stated that rising costs were their biggest challenge
     

Edward Winterton, UK CEO at BFS, said: “If SMEs are the warning lights of our economy, this quarter signals to us that they see trouble ahead.

“We typically observe a seasonal bounce in SME confidence at the start of a year, as businesses begin with renewed optimism.

“This year, the bounce was lower than ever before, highlighting how Brexit uncertainty is taking its toll on UK SMEs.

“Regardless of whether you supported leave or remain, Brexit has been an agonisingly slow process resulting in our SMEs pulling back on investment when our economy needs stimulus to grow.”
 

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