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SME outlook - A cautious confidence

SME outlook - A cautious confidence

Category: Business

Updated: 31/10/2008
First Published: 28/06/2006

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

This month has seen continuing signs of recovery and a returning confidence to the SME market. Three separate surveys have been released highlighting a more upbeat mood, with a cautious optimism growing across all sectors.

Bank of Scotland Business Banking's latest quarterly UK small business economic confidence survey, has revealed a continuing positive outlook. Almost nine out of ten UK entrepreneurs believe their business will perform better or at worst the same, and a third plan to invest more in their business over the next 12 months. Kevin Gillett, Head of Bank of Scotland Business Banking said: "Whilst there is some evidence of a more cautious outlook amongst entrepreneurs on capital investment and recruitment intentions, it's greatly encouraging that over four out of five fully expect their business to do as well or better in the year ahead."

Two further CBI reports have provided evidence to support these views, albeit with a slightly more guarded approach. The SME Trends Survey of manufacturers reported encouraging signs of recovery as orders for goods stopped falling for the first in five quarters. Order volumes are expected to grow faster than at any other time over the last 10 years, with the general optimistic business situation regarded at its highest for two years.

Worries surrounding high energy prices and falling employment have led to calls for continued help. Steve Sharratt, Chairman of the CBI's SME Council noted: "After years of tough conditions, smaller manufacturer's are beginning to see some light at the end of the tunnel. It is therefore crucial that the Government pushes ahead with the deregulatory agenda."

Concerns of a similar nature were raised in the latest CBI and Regional Development Agencies' Survey of UK Economic Trends. Again the general consensus was of a feeling of optimism and confidence, increasing upon that of the previous six months. However, certain areas provided slight worries, as Doug Godden, Head of Economic Analysis, CBI, highlighted: "The prospects for Britain's economy are brighter than they were six months ago. But at the same time, firms face a tighter squeeze on profits from higher energy and staff costs. Whilst finance and the services thrive, growth for retailers and consumer services is subdued."

Whilst a view of optimism and an air of confidence grow in the SME sector, certain aspects of the overall market continue to tug at the profits of businesses. The phenomenon of higher costs creating a negative impact is hardly new. The amount and range of costs though is becoming an ever growing problem. It must be hoped that optimism can outweigh these costs in the long term.

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