Bosses of small companies are increasingly upbeat about their prospects, according to a survey, adding to evidence that the outlook for the British economy may not be as bad as has been feared.
A poll of small and medium-sized firms commissioned by Barclays found that 41 per cent were optimistic about their outlook, the highest level since the second quarter of last year. Fifty-five per cent were expecting to increase revenues this quarter compared with a year earlier, while a third were planning to hire more staff in the next 12 months.
Barclays’ quarterly SME Barometer gives a glimpse of sentiment at smaller businesses across the country. Its latest poll canvassed 603 bosses between January 20 and February 1.
It comes amid turbulence in the wider economy as the Bank of England scrambles to bring down inflation by rapidly lifting interest rates. Consumer price inflation hit a 41-year high of 11.1 per cent in October, but by January had fallen for a third consecutive month to 10.1 per cent. The Bank has responded to soaring prices by increasing its base rate from a record low of 0.1 per cent in late 2021 to a 15-year high of 4 per cent this month.
The inflation jump and rising borrowing costs fuelled expectations that the economy would fall into recession this year. This month the Bank said it expected only a mild recession; it had warned previously that the UK faced its longest recession in a century.
Inflation has been driven higher partly by elevated energy prices, pushed up by Russia’s invasion of Ukraine. The Barclays survey found that energy costs were the top worry for smaller companies, with 73 per cent reporting that they were concerned about prices and 54 per cent saying they were looking at lowering their usage to try and cut their bills.
Only 15 per cent of respondents said they were pessimistic about their business prospects.
Colin O’Flaherty, head of SME at Barclaycard Payments, said: “It’s encouraging to see more businesses reporting optimism about their prospects going forward and investing to future-proof their revenue streams.”
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UK SME’s more optimistic about their outlook as threat of recession fades