By Jonathan Davies
Business confidence rose 15 points to a record 119.4 in the second quarter of 2015, according to Smith & Williamson’s Enterprise Index.
“The result of the General Election, delivering a majority government, left businesses with the stability they craved,” said Guy Rigby, head of entrepreneurial services, at Smith & Williamson, the accountancy and investment management group.
“More than 80% of the 200+ business leaders who took part in the established quarterly survey expect the economy to improve over the next 12 months. Seventy per cent of participants believe George Osborne’s March Budget statement was good for business, so they have reason to be hopeful that policy will stay on track in his upcoming July announcement.
“80% of respondents believed that the previous coalition government was supportive of private enterprise and so were concerned about the effect an unclear election result may have had on growth. Following the Conservative victory, 87% are optimistic about their own prospects over the coming year, with 83% planning growth or an acquisition over that time frame.”
Businesses fear EU exit
“There were nonetheless some concerns expressed as the first majority Conservative government for 18 years brought with it the promise of a referendum on the UK’s membership with the EU. Over 68% of those surveyed believe that the so-called ‘Brexit’ would negatively impact British businesses.”
“As 66% of participants are expecting the financial health of their trading partners to improve and with the EU forming the largest destination for the export of UK goods, a potential Brexit will become an even more pressing issue as we approach the referendum. 84% of businesses believe that growing exports will be a key barometer of economic success for the new government so it will be interesting to see how policy makers handle this issue, whatever the result.”
“9% of businesses felt migrants were absolutely essential to their business, and 62% of participants believed they played some part, so it would be reasonable to expect SMEs to be adversely affected should the UK elect to leave the EU.”
“Recent government releases* have indicated that meeting the export target of one trillion pounds by 2020 is unlikely to happen and that the UK will fall roughly £300 billion short. This has been supported by the recent Cole report,** an independent business review on exports, which has argued that only 29% of UK SMEs export and only 20% have any expansion plans,” said Stephen Drew, head of international services at Smith & Williamson.
“However, with findings from our Enterprise Index indicating that 76% of businesses believe that turnover from exports will increase and 54% of respondents exporting it appears that one side or other of this equation will have to give.”