Almost 90% of UK SMEs planning halting hiring over the next year the next year

Just over a tenth (12%) of UK SMEs are expecting to have more people on the payroll in the next 12 months, a sharp decline from earlier this year in March (37%) reveals a monthly SME Recovery Tracker from ACCA (the Association of Chartered Certified Accountants) and The Corporate Finance Network (CFN). Businesses across the UK continue to be impacted by rising inflation, an increase in cost of living and a looming recession, which is having a significant impact on the hiring of new employees.

The monthly SME tracker survey, which polls accountancy professionals on the financial outlook of their SME clients, also demonstrates that the expected stagnation is having a knock-on effect on business growth and ability to succeed with a quarter (25%) of SMEs reporting that continued economic pressures are jeopardising their business viability over the next 12 months. 

The skills shortage continues to dampen growth 

The skills shortage continues to stall SME growth in the UK with last month’s SME tracker identifying that one of the attributing factors to the stress UK SMEs are experiencing was finding the right skilled staff; with half (50%) of UK SMEs expressing that skills’ shortages are affecting their client services. With almost a fifth (17%) of businesses not actively looking to grow in the next year, this lack of access to talent and the economic downturn and turbulence is making SMEs de-prioritise hiring, impacting SME growth in the long term as well as increasing already existing strains.

Business need to prioritise training 
Training programmes put forward by the government, such as the apprenticeship levy are important routes for developing upcoming talent. However, over half (54%) of SMEs have admitted to not utilising the levy. Furthermore, 46% of businesses haven’t finalised their recruitment and training programmes for the next six months and only a quarter (25%) of businesses are increasing their intake of school and college leavers compared to recent years. 

The levy is currently an untapped resource for businesses which, if utilised, has the potential to address concerns arising from the lack of skills. 

Glenn Collins, Head of ACCA said: “It’s understandable why businesses have lost their appetite for hiring at this moment. Businesses are acting and responding in crisis mode and so prioritising critical activity is key. However, there is a great opportunity to hire talent among school and college graduates which businesses must look toward to support their growth over the next few years. Continual investment in skills is a necessity to fuel not only growth but survival. The findings demonstrate the government needs to do more to encourage SME investment in skills across all lines of a business.”

Kirsty McGregor, founder of The Corporate Finance Network, adds, “Economic strains are evidently taking a profound effect on UK SMEs and resulting in the de-prioritisation of other normal focuses for business owners, such as formulating longer term strategies and recruitment. Looking so short-term will only exasperate growth further. The government needs to do more to support our smaller businesses if they want them to increase employment opportunities in their local communities and ultimately bring in more tax revenues to stimulate the country’s economic revival.” 

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Notes to Editors

This edition has sought views from accountants working in practices advising some 48,500 SME clients.

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