SME confidence slumps » SMEInsider

SME confidence slumps

Further confirmation of the impact of Brexit being felt by the UK’s SMEs today with the publication of the latest CBI Quarterly SME trends survey. The barometer shows that while production has increased at small manufacturers, optimism is taking a real hammering following the vote to leave the EU. Indeed, 53% of the 472 small businesses surveyed said they were less optimistic.

According to the CBI, “Business optimism fell at its fastest pace since January 2009 in the last quarter.” However, it goes on to say that despite the widespread trend of scaling back investment in plant, machinery and property, “SME manufacturers intend to increase spending on product innovation and training for staff to help bridge the UK’s skills gap”


‘Business wants to see a clear plan’

Rain Newton-Smith, CBI Director for Economics, commenting on the findings, said “The UK’s SME manufacturers reported higher production, more staff hired and now expect to sell more of their world-class goods overseas over the next quarter, with a weaker sterling having a hand in this. But overall they do feel less optimistic and are scaling back some investment plans in machinery and plants.

“Naturally, much of the concern is related to uncertainty and business wants to now see the new Government deliver a clear plan and timetable for the EU negotiations ahead, while cracking on with immediate domestic priorities, including a decision on new aviation capacity in the South East, which will help the UK’s SME manufacturers to reach new markets in the future.”

Other key findings included:

  • 8% of small & medium sized enterprise (SME) manufacturers said they were more optimistic, while 53% said they were less optimistic, giving a rounded balance of -44% – the sharpest fall in optimism since January 2009 (-71%)
  • 27% said their volume of output was up, and 20% said it was down, giving a rounded balance of +6%. Companies expect output to be flat in the next quarter (+1%)
  • 26% said their domestic orders were up, while 24% said they were down, giving a balance of +2%. Firms domestic orders to fall next quarter (-10%)
  • 15% said export orders rose over the past three months, 23% said they fell, leaving a balance of -8%, but firms anticipate export orders to grow over the next three months (+9%).
  • Firms were a little more optimistic about their exports prospects for the year ahead (+4%)
  • The proportion of SME manufacturers citing concerns about political and economic conditions abroad as likely to limit export orders were at a survey record high (49%)
  • 28% of small and medium-sized manufacturers employed more people than three months ago, and 13% employed fewer, leaving a balance of +15%. Hiring intentions are flat for the next quarter (0%)
  • Plans for capital spending in the year ahead fell for both plant and machinery (-16% – lowest since July 2009) and buildings (-24% – lowest since October 2009)
  • Meanwhile, investment in product & process innovation is expected to rise at a moderate pace (+7%), as is spending on training & retraining (+8%).