8 in 10 SMEs Unphased by Uncertainty of Brexit

27 February 2017

There may be Brexit, debate on inflation and a new trade deal to hammer out with the USA, but none of this has rocked UK small businesses. Eight in 10 SMEs are predicting business as usual in the next three months, according to Hitachi Capital Business Finance.

The new poll reveals that 40% of SMEs anticipate growth in the three months to April 2017 – and a further 46% say they will continue as it is without significant growth or contraction.

Following the Bank of England’s projection that the economy would take a cumulative hit by 2019 of 1.5 per cent of GDP due to Brexit - which equates to around £30bn in today’s money – the new Hitachi Capital data suggests that SME confidence has remained consistently bullish over the last 15 months. The only exception was a short-term fall in confidence in the weeks immediately after the EU Referendum vote.

SME Outlook for the next three months. Tracking results since January 2016

 

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Net: Growth

39%

42%

32%

43%

40%

Significant expansion

6%

6%

4%

5%

6%

Modest organic growth

33%

36%

28%

38%

34%

The findings are from the quarterly Business Barometer by Hitachi Capital Business Finance, which tracks continuity or change in SME confidence across the UK, key regions and sectors.  The poll asked 1,213 SME decision makers what their business outlook was for the three-month period to the end of April 2017.

 Key findings

  • Continuing into 2017 the findings showed that 40% of those surveyed predicting significant growth or further expansion to their business. 
  • This year there are more SMEs predicating growth than there are those anticipating some form of difficulty by more than three to one (40% versus 12%).
  • Businesses that have been trading for the least amount of time (up to five years) were significantly more likely to have greater confidence in business outlook (52%), whereas those trading for 20 or more years were least positive (33%). 

 Regional highlights

  • London may be a world economic centre, but when it comes to small business, it is East Anglia that is the SME ‘confidence capital’ where 50% of small businesses predict growth in the next three months.
  • SMEs in Wales were those most likely to express concern for their business, with 10% fearing contraction and 8% predicting a struggle to survive. 

 

Jan 17

% predict net growth

July 16

% predict net growth

Jan 17

% predict net contraction

July 16

% predict net contraction

East 

50%

29%

12%

10%

North West

44%

32%

11%

20%

Yorkshire/Humber

43%

35%

12%

8%

London

43%

29%

12%

17%

South East

41%

31%

9%

14%

North East

40%

29%

10%

7%

East Midlands

40%

37%

17%

12%

West Midlands

40%

36%

8%

13%

South West

37%

31%

13%

11%

Scotland

36%

32%

15%

15%

Wales

26%

27%

18%

17%

Sector highlights

  • SMEs in Financial Services were the most likely to predict growth for the next three months (56%).
  • SMEs optimism in the Manufacturing sector has risen significantly over the last six months, buoyed by the prospect of cheaper exports. Those predicting steady, organic growth in the next three months are up from 30% to 49% on six months ago, while fewer small businesses in the sector are predicting contraction.
  • The Retail sector SMEs have expressed the most fear that business will contract over the coming months (17%) [See table in notes to editors].

Gavin Wraith-Carter, Managing Director at Hitachi Capital Business Finance comments: “With almost half of SMEs in the United Kingdom (46%) predicting business as usual for the next three months and a further 40% predicting growth, our research suggests that small businesses in the UK are paving the way for business development. SMEs are less inclined to subscribe to the uncertainties felt by their larger business counterparts. Global businesses fear the implications of changing trade negotiations that are being carried out under an uncertain political climate while many SMEs are taking the view of opportunity over loss; excited to expand with the possibility of new trade deals and feeling more in control of their own destinies.”

 Business outlook for the three months to 30 April 2017 – by industry sector

 

Significant expansion

Modest/

organic growth

No change

Contract/

scale down

Struggle to survive

Financial Services

13%

43%

38%

4%

0%

Finance

10%

41%

39%

8%

1%

Manufacturing

8%

41%

41%

6%

3%

Education

9%

36%

43%

8%

1%

Media

8%

37%

39%

10%

6%

IT & telecoms

8%

35%

43%

10%

2%

Real estate

8%

34%

50%

5%

2%

Medical & health services

12%

27%

44%

9%

4%

Hospitality & leisure

6%

33%

51%

2%

7%

Retail

2%

32%

46%

5%

12%

Construction

3%

29%

56%

9%

2%

Agriculture

7%

24%

52%

10%

5%

Transport & distribution

2%

20%

62%

8%

8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hitachi Capital Business Finance, a subsidiary of Hitachi Capital (UK) PLC, provides business asset finance to over 25,000 customers across the UK, powering both SMEs and bigger corporations to meet their goals and grow. Working across multiple sectors, the business provides a full range of funding options through brokers, vendors and online direct to SMEs. This includes hire purchase, operating lease, finance lease solutions and block discounting.

Hitachi Capital (UK) PLC is a leading financial services company with over 30 years’ experience providing innovative finance solutions to enable consumers, SMEs, fleet owners, motor dealers and retailers to grow and prosper. Hitachi Capital has over 1,200 employees, nearly £4bn of assets and over 1 million customers across its four business units; Consumer Finance, Vehicle Solutions, Business Finance and Invoice Finance.

Hitachi Capital is a wholly owned subsidiary of Hitachi Capital Corporation, one of Japan’s largest non-bank financial institutions. Hitachi Capital Corporation is part of Hitachi Limited, the global manufacturing and technology firm. Manufacturing continues to be a key part of Hitachi Capital’s DNA, delivering complex products to high levels of customer satisfaction. Its corporate clients include some of the UK’s leading companies such as British Gas, Royal Bank of Scotland, B&Q and John Lewis.

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