An SME Trends Survey released by the CBI has indicated growing pessimism among manufacturers about the economy - as a result SMEs are reappraising their business plans.
The CBI’s quarterly SME Trends Survey showed that general sentiment about the business situation in the UK has fallen among SMEs. As well as this is the finding that the majority of the 411 respondents expect no further growth in demand or output over the next quarter.
Out of all the respondents to the survey, 18% of manufacturers reported they are more optimistic than three months ago, and 28% said they were less optimistic. The resulting balance of -10% shows the first decline in overall sentiment in two years.
The reduction of UK manufacturers’ confidence in the market means many firms intend to keep their workforce level steady in the year ahead. Investment intentions have also weakened compared with 2010, with fewer firms planning to expand capacity in terms of expansion and new machinery, and a lot more expecting to invest only in replacing existing capital.
After a strong quarter for SMEs in the three months up to July, Lucy Armstrong, chair of the CBI’s SME Council, warned: “Growth is expected to stagnate in the next [quarter]. Confidence has also been affected by global economic and political uncertainty over issues such as the euro crisis and the US debt ceiling.”
The July 2011 CBI SME Trends Survey was conducted between June 27 and July 13 2011. 411 manufacturing businesses replied.