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UK SMEs Lukewarm about 2017 Prospects

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Almost three in every five (57%) SME business owners say that they do not feel confident about the UK’s economic outlook for 2017, according to the Close Brothers Business Barometer. The quarterly survey questions over 900 UK SME owners and senior management across a range of sectors and regions.

Firms at the smaller end of the scale – under £500k annual turnover – were the least confident, with 64% answering ‘no’ to the question ‘are you confident about the UK’s economic outlook for 2017?’.

“Businesses owners are not taking a negative view, but they are being pragmatic about the UK’s economic prospects over the next 12 months,” said Neil Davies, CEO, Close Brothers Asset Finance. “There are still many unknowns and this uncertainty is reflected in what small business owners are telling us.

“For example, the value of Sterling is seen as a short-term issue and doesn’t create conditions for long-term investment. While activity in a number of sectors is stronger due to the weaker pound, helping to boost orders from overseas, cost pressures remain high with price increases being passed onto consumers, which may contribute to an increase in inflation down the road.”

Regional analysis

Business owners in the North East and Northwest of England were the most positive, with 56% and 54%, respectively, feeling positive about the year ahead, contrasting with the 36% of Scottish respondents.

Full list of regional responses to ‘are you confident about the UK’s economic outlook for 2017?’:

  Yes No
North East England 56% 44%
North West England 54% 46%
West Midlands 49% 51%
East Midlands 49% 51%
Wales 45% 55%
Yorkshire/Humberside 45% 55%
South West England 45% 55%
Greater London 45% 55%
South East England 43% 57%
East Anglia 39% 61%
Scotland 36% 64%

Sector results

The most enthusiastic sector was Manufacturing, which returned a positive response of 61%, followed by Engineering with 52%; Construction 49%; Transport 47%, and Print 37%.

“UK manufacturing in on a high at the moment, with recent rates of growth for production and new orders among the best seen over the past two-and-a-half years, according to the Markit/CIPS purchasing managers’ index,” continued Neil.

“And this uplift in the manufacturing sector is reflected in what the survey respondents are telling us, which is that they see 2017 as a time of significant potential opportunity.”

(Source: Close Brothers Asset Finance)

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