By Maximilian Clarke
Businesses in the UK are more worried about broader economic issues such as the global economy, cheaper competition, and currency volatility than domestic uncertainty, the latest Travelex Confidence Index suggests.
The Index also showed a widespread drop in business confidence, undermined by global uncertainty and low domestic demand.
The ten most commonly cited causes of concern among business owners are:
1. The overall health of the economy (84%)
2. Cheaper overseas competition (70%)
3. Currency volatility (65%)
4. Reduced budgets (64%)
5. International regulation/compliance (44%)
6. Credit availability (43%)
7. Efficiency of international payments (39%)
8. Political influence (36%)
9. Reduced sales (30%)
10. Customer loss (27%)
Although credit availability came in at no. 6, businesses’ awareness of Project Merlin is extremely low; 62% had not heard of Project Merlin 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 companies 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.
“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,” commented Paddy Earnshaw, Customer Director of Travelex Global Business Payments.
“Access to credit is certainly important, and it is worrying that nearly two thirds of SMEs (small to midsized enterprises) 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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