Even with inflation at almost 9%, the UK economy not expected to grow until the end of 2024 and growing concern around the impact of Brexit on UK trade, 58% of small and medium-sized UK businesses would rate current trading conditions as good, with 22% rating them very good.
Looking forward, 41% considered their business prospects over the next year to be slightly positive with almost a fifth (19%) thinking their business prospects over the next 12 months are very positive, and only 14% believing their business prospects to be negative in this period.
Anxiety about survival
Concerningly, despite this apparently positive outlook, many SME owners remain anxious about the resilience of their business. Over two in five SMEs (43%) think there is a high to moderate risk that their business will enter insolvency because of the current economic conditions.
On average SMEs think their business could survive just over 9 more months in current trading conditions. Around a third (32%) expect their business would last 12 months or more, with just over half (51%) not believing their business will last a year in this climate.
To survive in current economic conditions, the majority of SMEs (71%) have been making adjustments to their businesses. Over a quarter (26%) have increased some or all prices and fees and 18% have cancelled or postponed planned investments. Over 1 in 10 (11%) have laid off some or all of their employees and a similar number have reduced employee pay or working hours (both 11%).
Matthew Howlett, Research Executive at Opinium commented: “Economic conditions have been so tough for SMEs over the past few years that even conditions perceived as ‘good’ are too tough for the majority of small businesses to expect to survive.
“This may be because the events of recent years mean many do not have confidence that their business could survive another unexpected event such as a pandemic or war, or it could reflect a feeling that our current period is one of great political and economic volatility which makes it difficult to feel completely confident in even the short-term future.
“Clearly, many SMEs are worried about the continuing resilience of their business. Concerningly many now feel they have to take drastic action such as cutting employee hours, pay or losing them completely in order to protect against any potential future shocks. It’s more important than ever that they are given the support they need to continue to operate and grow.”