Nearly a third of small and medium-sized enterprises (SMEs) in the UK delayed their investment plans in the third quarter as a result of uncertainty in the EU, according to the latest Smith & Williamson Enterprise Index.
“Ongoing macro-economic issues, such as a potential 'Grexit' and a lack of confidence in the global economy, as well as national challenges, such as less friendly dividend tax rules introduced in George Osborne’s Summer Budget, appear to have contributed to a drop in the Smith & Williamson Enterprise Index to 114.4, five points lower than its record high of 119.4 three months ago,” said Guy Rigby, head of entrepreneurial services at Smith & Williamson.
He added: “Changes to dividends, the introduction of the new National Living Wage and a less generous than expected annual investment allowance in George Osborne’s first Conservative Budget were not well received by business owners. Whilst still remaining high, at 70%, belief in the Government’s promise to support private enterprise dropped 10% as a growing number of SME owners felt they lacked support.”
Other factors undermining business confidence include the prospect of a US and UK interest rate rise, a potential 2016 EU referendum and volatility in global stock markets, sparked by China amidst concerns around global growth. These issues, which have been well aired in the press, are trickling down and undermining confidence amongst UK SMEs.
Help to export
“87% of SME owners thought the government should provide more support to help businesses export,” said Stephen Drew, head of international services at Smith & Williamson.
“Many of our clients recommend the official government websites as they are said to be both highly regarded and trusted. However, like many large websites that have existed for a while, the SME section of gov.uk has been said to have become difficult to navigate, untidy and complicated. Therefore, an overhaul and promotion of the information in a clear and centralised information portal would be beneficial.
“Many are unaware that research and development (R&D) activity undertaken by UK SMEs to enable them to export would attract R&D tax credits. This can be helpful as part of a suite of financing options that will make it easier for businesses to trade internationally.”
The rise and rise of crowdfunding
Over 90% of participants felt that, should their businesses require investment, they would consider using crowdfunding as a means to secure it.
Guy Rigby said: "This demonstrates an incredible awareness of crowdfunding, a financing technique which barely existed five years ago. A recent Government consultation surrounding the use of crowdfunded investments in ISAs highlights that this is being considered as an increasingly important way of raising funds.”
You can take part in the Smith & Williamson Enterprise Index Q4 survey right here. It only takes two minutes and you'll receive a month's free subscription to Hootsuite Pro if you enter your email address.