SME growth reaches five-year high

The number of small and medium-sized enterprises (SMEs) with growth and investment intentions has reached its highest level in five years, according to the Federation of Small Businesses’ (FSB) latest Small Business Index.

The FSB’s new index discovered a considerable increase in positivity and confidence among small business owners and supports recent data published by the Enterprise Research Centre which suggested SMEs are growing at the fastest rate since 2008.

Almost two-thirds (65 per cent) of small firms surveyed said to the FSB they plan to grow moderately or rapidly during the next quarter; while a further 32 per cent anticipate investing more heavily in capital during the next year.

The number of SMEs taking on new staff has also increased in the last 12 months from two per cent to 8.9 per cent, with almost a quarter (24 per cent) of SMEs experiencing increased revenues and 17 per cent reporting improved profits.

Small business confidence levels have grown encouragingly at an index rate of +37.9 – an increase from the +28.7 recorded in Q1 2015.

The index shows that the South East of England is still at the forefront of the UK economic recovery, which some people will view negatively as an unbalanced national recovery. Meanwhile many SMEs stated the cost and availability of skilled professionals remains a considerable barrier to growth.

Rob Harbron, managing economist, the Centre for Economics and Business Research (CEBR), said: “These results give much cause for confidence and show that the UK’s small business population will be instrumental in supporting economic growth in 2015.

“Confidence is stabilising and low inflation is boosting profit growth. Strong capital investment intentions and increased worker productivity are encouraging as they play a key role in a sustainable economic growth path.”

John Allan, national chairman, FSB, added that the results of the latest Small Business Index “show the major role that small businesses play in the growth of the UK’s economy”.

“It is critical the new government continues to develop the right environment to support businesses planning to grow, invest and take on new staff in the next 12 months,” added Allan.

Date published 23 Jun 2015 | Last updated 23 Jun 2015