‘Autumn Statement a chance to boost floundering confidence of small and mid-cap businesses’

According to the latest QCA/BDO PULSE survey, which polls small and mid-cap quoted businesses, there are growing concerns about the unfavourable global economic climate impacting firms within the UK.

The survey asks businesses for a score of between 0-100 on how optimistic they’re feeling about the UK economy with 50 being neutral. The average score given by the businesses surveyed has fallen from 64.3 in May 2015 to 61.8. While this still indicates a degree of optimism, the general trend since January 2014, where the score peaked at 69.3, is downward.

Optimism about companies’ own prospects has also fallen, from 73.6 in January 2014 to 68.1 now. This mirrors a drop in their expected turnover growth for the year ahead to 13.4 per cent — the lowest score since July 2013.

This declining confidence is having a knock-on impact on employment prospects for many firms. According to the survey, the number of companies that expect their number of full-time employees to grow over the next 12 months has declined from 77 per cent in May 2015 to 68 per cent in September — again the lowest since July 2013. However, those who are hiring expect larger headcount growth, offsetting the increasing number of companies who expect no change in their headcount. A steady 9% of companies expect employee numbers to fall.

For some observers, tomorrow’s Autumn Statement is a chance for the Chancellor to focus on the needs of small and medium-sized businesses.

Neil McGill, director at accountancy and business advisory firm BDO LLP, said: “Global uncertainty is impacting the confidence of the UK’s small and mid-cap businesses. The strengthening pound against the Euro, combined with the Chinese economic slowdown is having an impact on growth at home. In next week’s Autumn Statement we would like to see the Chancellor put the UK mid-market at the heart of his plans to rebalance the UK economy.”

Tim Ward, chief executive of the Quoted Companies Alliance, said: “It’s clear that the business confidence of small and mid-cap companies has suffered a correction. Domestic conditions for business growth remain relatively favourable and many companies continue to enjoy strong organic growth. In the Autumn Statement, we need to see initiatives which mark a decisive move away from favouring debt finance towards permanent equity to encourage sustainable growth.”