Hiring, retaining and training will be the greatest challenge for 47% of UK SMEs over the next 12 months, considered more serious than either Brexit or political turmoil.
Longer-term, the country’s endemic skills issue is going to be compounded by the 14 million employees expected to retire over the next seven years, with just seven million people of working age entering the market.
Bill Williams, chief executive of Centre for Engineering and Manufacturing Excellence (CEME), and member of The Manufacturer Top 100 judging panel, explained: “We are in a crisis situation on the skills front.
“In the manufacturing sector, we need twice the number of engineering talent than we now have. If employers can’t recruit talent from Europe it will be the competitive edge of British business that will suffer. We need a Brexit deal that will easily allow all employers to recruit the skills that UK business needs.”
In an effort to counter the challenge, businesses are advised to offer new talent packages above market levels, along with finding more innovative ways of targeting people that aren’t looking to move jobs.
The skills issue aside, more than two-thirds (70%) of SME businesses are confident that sales will increase over the next 12 months, alongside profitability (52%). This is despite inflation hitting the highest levels for four years (2.9%) alongside the drastic fall in sterling which has impacted companies trading overseas.
These factors, coupled with Brexit negotiations and political turmoil, wouldn’t appear to be eroding the confidence of UK SME leaders in their future success.
This is despite a general low-level of faith in the economy. Just over a third (39%) said that economic conditions have declined for them over the past year, with half of those believing this trend will continue. Less than one-in-10 (7%) described themselves as being “optimistic”.
In stark contrast, North American SME leaders feel far more positive about their economy under Donald Trump’s leadership. In fact, more than half (55%) say the US economy has improved over the past 12 months and 38% believe this will continue in the next year.
The research was carried out by international advisory group for senior executives and business owners, Vistage, and took in the opinions from more than 400 UK SMEs.
The findings also revealed that ‘Brexit proofing’ isn’t a major concern for businesses, with just one-in-four SME leaders claiming that have increased prices, less than a quarter (22%) have reduced overheads, a fifth have set up bank accounts in alternative currencies, and 12% have frozen headcount.
Half of UK SMEs still consider the EU to offer the greatest long term opportunity in terms of an effective trade deal with the UK, double those that cite the US (25%). This is closely followed by Asia Pacific at 17%. Again, our research in the US shows over a third (35%) of business leaders believe a trade deal with Europe should be a priority for Trump’s administration compared to just 11% citing the UK.
Roger Martin-Fagg, Vistage chief economist, explained: “It’s no great surprise that SMEs across the UK are nonplussed about the ongoing Brexit negotiations.
“What’s happening now is simply a process to agree the divorce settlement. This will continue until March 2019 when we officially leave the EU. It’s at this point the future trade relationship will be agreed, this is when the changes that could impact business in the UK will be implemented. Reaching this deal is crucial; no deal would be a disaster for our economy.”