According to a recent ACCA and Corporate Finance Network survey, confidence among UK small to medium-sized enterprises (SMEs) has dropped significantly following the government's Autumn Statement. The survey found that one-third of SMEs are now less confident about their growth prospects for this year, with the number of SMEs with growth ambitions dropping from 38% last summer to just 17% today.
The survey also revealed that a majority of companies are not planning to hire additional personnel in 2023, varying from 10% for companies in London to just 1% for companies in the east of England.
It was found that despite the government's efforts to mitigate inflation, buffer a recession and moderate rising energy prices, these measures have been insufficient. A survey of over 12,350 SME clients' financial outlooks conducted among accountancy professionals returned this unfortunate outcome.
Many small companies feel overwhelmed by debts they have accrued while coping with pandemic-related restrictions, and corporate executives have identified energy prices as a significant concern, especially since the state's subsidies that keep bills low are set to end in April.
Rising energy costs have also contributed to a ripple effect of inflation throughout the UK, with official data showing that the Consumer Price Index (CPI) was at 10.5% in December, slightly lower than October's 41-year high of 11.1%.
Furthermore, this week revealed that insolvencies sharply increased by the end of 2022, with most businesses failing during this period being small and medium enterprises, typically short on necessary funds to survive any economic uncertainty.
In light of economic instability, an overwhelming majority (2/3) of Small and Medium Business owners reported heightened stress levels compared to 6 months prior. This is increasingly concerning as 80% acknowledge the need for more government aid to help SMEs continue their operations.
This survey should be of great concern to policymakers, as small companies often tend to have a more optimistic outlook than the average business, given all that is needed to start and develop personal businesses, which form the foundation for economic progress.