Optimism over growth falls in Scotland and across the UK

Under a fifth of SMEs plan for growth in 2023 

Government measures to tackle the impact of inflation, impending recession and rising energy costs, have fallen short according to the latest edition of the ACCA UK and The Corporate Finance Network (The CFN) SME Tracker which polls accountancy professionals on the financial outlook of their SME clients. 

The proportion of SMEs with plans for growth has plummeted from 38% in the summer of last year to just 17% in the most recent survey, while over a third (36%) of businesses reported they felt less, or significantly less, confident in their growth potential following the Chancellor’s Autumn Statement in November. Similarly, only 18% anticipate a higher headcount in 12 months’ time, compared to 37% in March 2022. 

Worryingly, the ongoing stress of significant economic strain is taking its toll on the mental health of businesses with almost two thirds (63%) reporting higher levels of stress and anxiety. This has almost doubled over a six month period (33% in June 2022). A number of respondents cited concerns about energy costs as a significant challenge for firms, with the vast majority (78%) suggesting small and medium firms should be the focus of future government support.  

ACCA UK and The CFN warn that as economic uncertainty continues, more detailed and targeted support from governments in Edinburgh and London is needed to help boost confidence and return the economy to growth. 

Susan Love, ACCA’s Head of Scotland said : ‘Our data suggests that firms in Scotland and across the UK were unimpressed by the Autumn Statement. Unsurprisingly, the impact of energy costs is high on the list of business concerns, and the recent announcement about reduced energy support from April, is unlikely to have dented the overarching sense of pessimism. As tax and spending plans for Scotland are finalised and as we approach the UK’s Spring Budget, businesses are desperate for a confidence boost, so we need to see more targeted, long-term measures to help businesses plan, invest and grow.’ 

Kirsty McGregor, founder of The Corporate Finance Network, said: ‘It is quite shocking how business sentiment has flipped from having some hope for growth last quarter to now lacking in optimism this month. This is a direct result of the lack of focus on growth initiatives for small businesses in the Autumn Statement whilst they are still managing increased interest rates and the rising energy costs coupled with the latest announcement of a reduction in government support. I hope that the Chancellor is able to consider more positive steps for the Spring Budget in March to bring more positivity to the founders and owner managers of the UK’s millions of small businesses.’

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About the ACCA UK and The CFN SME Recovery Tracker 

This edition has sought views from accountants working in accountancy practices (SMEs) cumulatively advising some 12,348 SME clients and a separate additional survey of in-house finance professionals working across 51 private businesses. The data for this poll closed on 3 January 2023. 

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About The Corporate Finance Network: The Corporate Finance Network – www.thecfn.org.uk - consists of some of the most proactive and commercially astute regional, independent accountancy firms in the UK. They specialise in providing corporate finance advice for smaller transactions. Kirsty McGregor can be contacted at info@TheCFN.org.uk