UK small and medium-sized enterprises (SMEs) are most worried about broader economic issues such as the global economy (84%), cheaper competition (70%), and currency volatility (65%), according to the latest data from the Travelex Confidence Index (TCI).
The findings also revealed that 59% of SMEs had little to no confidence in the current economic climate, representing a 32% drop from June and the lowest level of confidence since the TCI began in March 2010.
The top 10 concerns for SMEs are:
- Overall health of the economy (84%).
- Cheaper overseas competition (70%).
- Currency volatility (65%).
- Reduced budgets (64%).
- International regulation/compliance (44%).
- Credit availability (43%).
- Efficiency of international payments (39%).
- Political influence (36%).
- Reduced sales (30%).
- Customer loss (27%).
Although credit availability came in at number six, SME awareness of ‘Project Merlin’ is extremely low: 62% had not heard of the agreement between the British government and four of the major high street to promote lending to businesses, and of those who had, only one in 20 believed it has helped them obtain credit.
Equally worrying ahead of the Autumn Statement is the fact that 66% of SMEs don’t believe the government’s efforts to drive an export-led recovery have affected their business, with 48% thinking an export-led recovery unlikely despite policy-makers’ sustained campaign to depreciate the pound. With sterling fluctuating amidst an uncertain global outlook, external risks seem to have reduced the efficacy of the Coalition’s current policies.
Paddy Earnshaw, customer director of Travelex Global Business Payments, said: “The results of this survey are not reassuring. Survival is paramount in the current climate; British businesses are worried about the basics of simply staying afloat. Access to credit is certainly important, and it is worrying that nearly two thirds of SMEs don’t know what Project Merlin is. It is not, however, the only concern for SMEs trying to navigate a hostile economy. If the government is serious about leading an export-driven recovery, then it should not focus solely on credit availability when there are other pressing issues to consider.”
As well as the lowest confidence level on record, the data showed that 68% of SMEs now think a ‘double-dip’ recession is likely, an increase of 80% compared to last November. Earnshaw continued: “It is not surprising SMEs are pessimistic about the health of the global economy given eurozone woes. What is surprising is how little we have heard to date about solutions that address the real concerns of British SMEs. The Chancellor needs to set out clear plans in his Autumn Statement that tackle their fears over growth and economic volatility. We have to question whether or not the government’s policies are actually addressing the needs of the SMEs they are meant to support.”
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