Although the recession has been declared officially over in the UK, SMEs are slow to throw caution to the wind.
According to the latest survey by AXA Business Insurance, SME optimism remains steady at 83 per cent. While this seems high overall, it represents a 9 per cent drop in optimism levels compared with a year ago. Plus, 40 per cent fewer SMEs are planning to hire new staff in 2014.
Businesses in some sectors are more optimistic than others. Construction and industrial companies are feeling very positive about the year ahead, reporting 9 per cent higher optimism for 57 per cent overall positivity nationwide. This change in attitude is likely a result of the UK’s booming property market.
However, retail businesses are most hesitant about the opportunities around the corner. Growth expectations dropped from 71 per cent last year to 58 per cent today. A potential rise in interest rates was frequently cited by survey respondents as a reason for reduced optimism – 41 per cent of SMEs consider this a key concern. Following on its heels is the ongoing economic crisis in the Eurozone, which causes further worry for 25 per cent of firms.
Putting the results in context
“It’s good to see that, overall, optimism remains high; but we can’t ignore the drop in growth expectations,” says Darrell Sansom, managing director of AXA Business Insurance. “It could simply be that there was a dramatic surge of optimism last year as the economy started to pick up and that this has now settled to more realistic levels.”
Sansom urges SMEs to put adequate protection in place to give them the confidence to take significant steps forward. “Whatever the reasons [for reduced optimism], we want to see the UK’s SMEs – who are such powerful drivers of our economic recovery – make the most of our improving economic climate,” adds Sansom.
Support through the good times and the bad
Choosing a high-performing business account and carefully reinvesting profits will help your business to thrive as the economy continues to pick up. Establishing a safety net for worthy investments will also serve to restore overall optimism levels for SMEs, who have every reason to embrace the ample opportunities ahead of them.