By Daniel Hunter
A survey of UK small and medium-sized business leaders has found that ongoing uncertainty over their near-term economic prospects is putting pressure on them to work more hours for less gain this summer.
The survey, commissioned by AXA Business Insurance, found that nearly two-thirds (65 per cent) of respondents lacked optimism over the growth of their business within the next six months and only just over one-third (36 per cent) are forecasting a greater profit this year compared with last year.
This report comes despite the news that UK can expect an Indian summer, with the Ernst & Young ITEM Club forecasting that the economy will return to growth over the next six months, boosted by falling inflation and a pick-up in consumer spending.
However, 40 per cent of respondents suggested they would not be taking any sort of holiday this summer and a majority are expecting to earn the same (48 per cent) or less (29 per cent) this year, in comparison with last year.
“Entrepreneurs and small business leaders are the backbone of any economic system," Managing Director, Direct & Partnerships, AXA Commercial Insurance, Darrell Sansom said.
"Their relentless spirit and passion provides much of the energy fueling the UK economy, so it’s alarming that such a large proportion are so downbeat over their short-term business prospects.
"Much like the world’s athletes gathering in the country this summer, the UK business community is readying itself for a very competitive trading time. They’ll be working even harder and with less resources to chase the growth opportunities that are out there.”
Continued economic uncertainty across the Eurozone and Government austerity measures were cited as the two biggest drivers behind respondent’s lack of optimism, with most suggesting low interest rates, the London Olympics and other milestone events having no effect on their economic outlooks.
Respondents also demonstrated a cautious approach to managing recruitment, with only nine percent suggesting they were planning on hiring new staff by the end of the year. Of those with no hiring plans (91 per cent), most believed they won’t require the extra resource (55 per cent).
Asked about their capital investment plans, three-quarters of respondents suggested they are not planning on investing in any new equipment or resources this year. Of those planning an investment (25 per cent), a large number suggested they were purchasing something they didn’t have in the business already (36 per cent) or to fulfill existing demand (24 per cent).
“A lot has been done to keep the UK SME community afloat over the past few years, but this survey is suggesting that business leaders are lacking the support they need to expand their businesses," Sansom continued.
"Our Business Guardian Angel website, for instance, was launched to arm small businesses with the practical tools and knowledge needed to enable growth during these fragile trading conditions, whilst managing risks affecting their business throughout the process.”
The survey was conducted as part of AXA Business Insurance’s Business Guardian Angel resource for UK small businesses, and in support of the launch of its real-time Optimism Index — a live barometer of UK business sentiment. As part of the launch, AXA is offering participants the chance to win an iPad 3, simply by registering and submitting their business outlooks. There’s one up for grabs every month between now and the end of the year.
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