Azets: SMEs positive about UK economy but moreso in London than Scotland
More than two-thirds of UK SMEs feel positive about the UK’s economic outlook – though there is more optimism in London and the south than in Scotland, according to SME accountancy firm Azets.
According to a new survey, 87% of UK SMEs expect to be trading in a year whilst a further 68% feel positive about the UK’s economic outlook with more than 56% expecting profits to increase.
In addition, 56% of SMEs expect to recruit more staff during the next year and 60% intend to invest in the business. 73% of those SMEs with staff on furlough intend to return all of their staff from furlough.
However, 60% of businesses in Scotland and 59% in the North of England feel positive about the UK’s economic outlook compared to 71% in London and the South.
As the UK went into lockdown last year, the government stepped in to support businesses with 71% of SMEs feeling well supported by the policy programme.
Peter Gallanagh, Azets CEO for Scotland and the North, said: “There is a robust level of optimism across the SME community and the investment and recruitment intentions are very encouraging. The disparity in optimism between Scotland/the North and The South reflect the heavy weighting towards the service sector in the South, which is showing stronger and faster signs of recovery.
“Hopefully recovery in confidence in Scotland and the North will accelerate as the economy strengthens across the regions, entrepreneurs start to invest and employment increases.
“Clearly there are wider challenges with shortages of skilled labour, soaring raw material costs and the threat of inflation. SMEs will be adjusting their business models and considering innovative ways to reduce costs and their dependence on single supply chains. This is sound future-proofing and will help ensure they are well placed to capitalise on growth opportunities.”
Chris Horne, Group CEO of Azets, added: “Our first SME barometer was conducted against an unusual backdrop. After a year of deep crisis and upheaval; with the vaccination programme accelerating and lockdown restrictions beginning to ease, the prospect of economic recovery feels within our grasp. The research highlighted a stubborn optimism among SMEs and a pragmatic awareness of the need to adapt to the ‘new normal’ post-Covid.
“The biggest opportunity and biggest threat for SMEs is using technology and flexible working to adapt their business model. Those who get this transition right will be in a better position to survive and thrive. Given the importance of ensuring that the SME sector continues to prosper, these findings point to areas where further government policies are vital in delivering the support businesses need right across the UK.”