Small businesses in the UK (SMEs) are increasingly confident in their ability to grow and fuel the economic recovery, but fears about the continued impact of the pandemic lockdown persist.
According to new data released today by the British Chambers of Commerce (BCC), 63% of SMEs are emerging from lockdown with concrete plans or intentions to expand their business over the next year.
The manufacturing sector (68%) is particularly optimistic, while 58% of the hardest hit B2C (business-to-consumer) companies, including hotels, restaurants and retail, still anticipate growth.
Research in partnership with Funding Circle – the UK’s largest small business lending platform – surveyed over 1,000 businesses, almost all SMEs.
“We’ve seen some really positive signs since the reopening with regular attendance, especially with the weather change over the past week,” said Claire Walker, co-executive director of the BCC. “Businesses will feel more confident” with more government assurances.
SMEs “will be more willing to invest in employment and in the development of their business”, if there is “a safety net of financial support will be provided in case of need of restrictions which reduce or stop business activity in order to to protect public health, “Walker added.
While the UK economy has yet to fully reopen, more than half (53%) said they had already restarted or returned to pre-pandemic levels in April, with a further 27% expecting reach this milestone by October.
By the end of 2021, 91% of businesses plan to have a full restart, and only 1% do not plan to restart in the foreseeable future.
Many companies said the main barriers to reopening are related to COVID, such as the risk of additional lockdown (cited by 38% of respondents) or social distancing requirements (cited by 37%).
Concerns about falling customer demand (33%), inflationary pressure (18%) and recruitment difficulties (14%) are also weighing on UK businesses.
The report also found that access to finance will be key to helping SMEs unlock their full growth potential, with almost half (44%) believing it will help overcome the remaining hurdles they face.
It comes after separate data showed the UK’s private sector grew at its fastest pace in more than two decades in May, as the reopening of the economy lifted business confidence to a new level. record.
IHS Markit / CIPS Flash UK Composite PMI showed in May that its measure of private sector growth had reached its highest level since the index began in 1998, with hotels, restaurants and other consumer services showing the highest demand.
The figures also follow a strong outlook for the UK economy as it reopens at full capacity in the coming months, with of private sector economists join Bank of England in predicting historic growth year.
Monthly private sector forecasts prepared by the Treasury also indicate a strong improvement in forecasts for the UK economy. Analysts are now predicting the best year of growth since the aftermath of World War II.
The average of the 23 forecasts made since the beginning of May shows that economists are now forecasting GDP growth of 6.5% in 2021, against a forecast of 5.7% made last month. This is the third month in a row that expectations have been revised upwards.
The highest forecast comes from Goldman Sachs (SG), which now expects the economy to grow 8.1% this year. The lowest, from macro forecaster Heteronomics, is 4.9%.
Watch: Will the UK economy rebound in 2022?