Almost one-third of UK SME owners uncertain on Single Market question

An "orderly" Brexit is still possible, according to a new report by Retail Ireland
"Market disruption caused by Covid-19 and Brexit has made it difficult for Irish exporters to maintain existing sales to core markets and to diversify into new markets," says Paul Kelly, FDI director

43% of UK SMEs say uncertain economic environment is holding back investment, new report by Bibby Financial Services reveals

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27 April 2018 | 0

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Almost a third of UK SME owners (30%) don’t know whether or not UK should stay in the Single Market, despite the UK fovernment’s pledge to leave the Single Market and the Customs Union, according to the latest SME Confidence Tracker from independent financial services provider, Bibby Financial Services (BFS).

The quarterly report also highlights that despite rising confidence overall, more than two-fifths of UK SME’s (43%) say they are holding back on investing in their businesses, due to the economic uncertainty surrounding Brexit. This is in stark contrast to Irish SME owners who reported in the Bibby Global Business Monitor, published in October 2017, that 97% were expecting to invest in their businesses this year.

Rise in confidence

The number of UK SMEs expecting sales to increase between April and June jumped by 13%, with half (50%) expecting to see an increase, when compared with expectations for the first three months of the year. The overall confidence index rose by six basis points from 58 in Q4 2017 to 64 in Q1 2018. It is the highest reading since Q2 2015 when The European Union Referendum Bill was first unveiled.

Skilled workers needed

With near record-low levels of unemployment, over a quarter (27%) of UK SMEs are struggling to hire skilled workers, and 23% say they have had to increase wages to retain existing skills. With many firms reliant on overseas workers, there are concerns that the issue will be compounded when the UK leaves the EU next year.

Over the next three months, more than two-fifths (41%) of UK SMEs are planning to invest in training and developing existing staff, while a quarter (24%) are planning to bring in new talent. Just under a third (30%) are planning to upgrade their digital technology.

“It is clear that even limited clarity over Brexit – and some compromise on behalf of both the UK and the EU following recent negotiations – has had somewhat of a calming effect on UK SMEs,” said Mark O’Rourke, managing director of Bibby Financial Services Ireland. “This has resulted in an increase in confidence, which is long overdue following two years of tumbling confidence and subdued investment.”

Confusion persists

“However, our research shows there’s still ongoing confusion amongst UK SME owners as to what’s involved in staying in the Single Market and the Customs Union,” O’Rourke said. “Real stability won’t be achieved until the UK government and the European Union finalise their plans.

“No matter how big or small an Irish SME is, Brexit is going to affect their business,” he added. “The Irish SMEs which will be successful in the long-term are those who are planning now for Brexit and thinking strategically about how they can protect profit margins, amid this insecurity.”

 

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