UK Government measures to support SMEs facing inflationary pressures and falling demand 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 number of SMEs who have plans for growth has plummeted from 38% last summer to just 17%, with the Chancellor’s Autumn Statement failing to deliver on supporting businesses’ growth ambitions. The survey highlights the underlying pessimism among UK SMEs, as a third of businesses felt less confident in their ability to grow following the statement in November. Figures on SMEs planning on hiring more staff are also significantly lower at 18% nationally, compared to last year when 37% of companies planned to take on additional staff.
Worryingly, the ongoing stress of significant economic strain is taking its toll on the mental health of SME owners, with an alarming 63% reporting higher levels of stress and anxiety. This has almost doubled over a six month period (33% in June).
SMEs are pinning their hopes on the Spring Budget in March 2023, with 78% of respondents believing that the government should prioritise initiatives to support small and medium sized businesses.The concern around energy costs was summed up by an accountant based in Wales who noted that ‘energy costs drive problems in the economy and we have to get to grips with this. We should move to self sufficient sustainable options. Unfortunately, this will take years to achieve but should be tackled at pace.’
ACCA UK and The CFN warn that as economic uncertainty continues, more detailed and targeted support from the government is needed to help boost confidence and return the economy to growth.
Lloyd Powell, Head of ACCA Cymru Wales, said: ‘If the UK government wants to achieve its ambitions for economic growth, then it needs to take action and put in place a robust plan to address business pessimism. With an uninspiring Autumn Statement and subsequent cutting back of measures such as the energy support scheme, many SMEs are struggling and mental health is plummeting as a result. As we approach the 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.
About ACCA: ACCA is the Association of Chartered Certified Accountants. We’re a thriving global community of 241,000 members and 542,000 future members based in 178 countries and regions that upholds the highest professional and ethical values.
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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