Three quarters of SMEs (74%) say that the upcoming budget will directly impact their future growth plans, according to research from specialist SME lender, Simply Asset Finance. Nearly a third of businesses (31%) say it’ll have a significant impact,13% believe it will be fundamental to them, while just 15% expect the budget to have no impact on their future growth plans.
The findings reveal that faced with the current economic climate, 30% of SMEs have raised prices, 16% have switched to fully remote working, and 16% have outsourced more of their business services. Crucially, it has also forced businesses to dampen their future prospects, with 16% of SMEs found to have paused or reduced investment in innovation/ growth.
Top of businesses’ worries when it comes to the challenges ahead is a stagnant UK economy (49%), but a significant proportion remains worried about high levels of inflation (37%) and high interest rates (35%), which impact costs and credit availability.
The optimism and enthusiasm for growth among SMEs across the UK remains clear. More than two in five (42%) are optimistic – 30% said they think it’s going to be a ‘pretty good year’ and 12% are ‘really excited’ about the year ahead and growth prospects. There is also a notable cohort (18%) that say while they’re not worried, they might not grow as much as they’d like.
The data reveals that only a quarter of businesses plan to borrow to invest in technology (25%) and around one in five (19%) to expand to new markets. A similar amount (17%) say they’ll use borrowing to expand the workforce and also upgrade existing infrastructure (17%).While 15% plan to use external finance to invest in machinery. Furthermore, just over one in ten UK SMEs (11%) have targeted investing in R&D innovation as the use case for external finance and 14% say they’ll use it to upskill/ train their workforce.
When it comes to the progress made by the new government in supporting businesses like theirs, the jury is divided. While two in five (40%) say they’re underwhelmed by progress so far, 31% are pleased. But the Budget offers an opportunity for the Government to take bold steps and empower businesses to set a course for growth.
Closer ties to the EU (24%) and government backed loans for small businesses (also 24%) followed close behind. One in five (20%) also identified better transport infrastructure as a priority that needs to be addressed.
Mike Randall, CEO at Simply Asset Finance, said “It’s evident that the Government does not yet have the full confidence of UK business, but the budget is an opportunity for that to be tackled head on. Businesses up and down the UK recognise that the next 12 months offers a real opportunity for them to grow. But they need a helping hand to seize it.
“The OECD recently updated its growth forecasts for 2024 from 0.4% in May, to 1.1%. While achieving this requires the success of small and medium sized businesses, if the UK is to be serious about growth, the investment ambition needs to be much greater. The Government needs to recognise the importance of the budget to these growth plans, listen to what businesses need, and take action to support them accordingly.
“By providing targeted support around high energy costs, reducing red tape, and offering tax incentives for innovation, the government can empower SMEs to innovate, grow, and compete locally, nationally, and even globally. By doing that, we can create an environment where SMEs thrive, driving economic growth and innovation.”