UK small and medium size enterprise (SME) economic confidence has grown to 68 per cent in Q3, the highest on record according to the latest findings from the Western Union Business Solutions International Trade Monitor (ITM).
The report released today also found that SME manufacturers expressed more confidence in the UK economy than their retail counterparts, 72 per cent compared to 64 per cent.
Confidence in the UK economy in the period July-September improved across the board:
– 68 per cent of British SMEs expressed confidence in the UK economic climate, an increase of 12 per cent over last quarter and 22 per cent over Q3 2012; this number is the highest reached since records began in March 2010.
– 50 per cent of SMEs believe the UK’s general business environment will improve, up from 37 per cent in Q2 and 29 per cent in Q1.
– 41 per cent of SMEs have also seen an improvement in the domestic economy, up from 20 per cent last quarter and a mere seven per cent in Q3 2012.
– Moreover, 77 per cent of SMEs thought that international trade would improve, another new high, beating the previous record of 68 per cent set in Q4 2012.
Kerry Agiasotis, Chief Commercial Officer, Western Union Business Solutions, said: “Small and medium-sized businesses are embracing improved economic conditions. In Q2, larger companies were expressing optimism, but this has been slower to trickle down to SMEs. What we are seeing now is the first significant rise in SME confidence as domestic economic data grows stronger.
“It is particularly encouraging to see that Britain’s SME manufacturers are finally expressing more confidence. SME sentiment indicates that we are in the midst of a real recovery, but its sustainability is still being questioned. The green shoots we are seeing could easily be crushed by a seismic event, such as a renewal of the sovereign debt crisis in Europe. It is too soon to be complacent.”
The International Trade Monitor also found SMEs had increased trade expectations with Europe:
– 35 per cent said they expect trade with the Eurozone to increase in the next six months, a 10 per cent increase quarter on quarter.
– Only 5 per cent expect trade with Europe to decrease, the lowest number on record.
– 34 per cent of SMEs expressed concerns about Eurozone instability compared to over 60 per cent at this time last year.
The overall health of the global economy still remains the overriding concern amongst SMEs, with 72 per cent naming it as a worry and more than half of SMEs were concerned about currency volatility (53 per cent), suggesting that market movements tied to the end of QE remain a source of anxiety. Worries about cash flow and customer loss also remained at 47 per cent and 51 per cent of SMEs, respectively.