UK businesses are keeping cash close at hand and limiting their use of business savings accounts, according to new research.
Hampshire Trust Bank’s latest annual SME Savings Tracker found that businesses have been reducing their savings balances over the past two years as they look to pay off outstanding loans and pursue investments.
Factors behind the trend include Brexit, with the UK’s current departure deadline of October 31 fast approaching. More than one-third of businesses expressed concern about the impact of Brexit on the short-term economic outlook.
Stuart Hulme, director of savings and marketing at Hampshire Trust Bank, said: “SMEs fuel the British economy, so it is important that they are supported. This research builds on that communication and identifies some of the wider market trends and recent developments that may impact SMEs.”
The study of more than 500 UK businesses found that SMEs have on average £429,000 in their business savings account, a 4% decrease from £446,000 in 2017. In comparison, businesses have on average £726,000 in their business current account, a rise of 78% compared to 2017.
The study also found that:
- 54% of SMEs expressed concern regarding increasing interest rates on borrowing;
- 43% are concerned around the uncertainty of whether borrowing facilities will continue;
- SMEs are placing around 37% of their total funds into savings.