UK: Entrepreneurs See Rise In Business Confidence

Last Updated: 15 October 2013
Article by Guy Rigby

The latest Smith & Williamson Enterprise Index revealed that confidence in the economy is on the up with 73% of respondents expecting an upturn in the economy.

The inaugural Index, carried out in January of this year, recorded a positive outlook as far as the economy was concerned with a benchmark score of 100, whilst the second quarter saw a slight dip in respondents' optimism with the score dropping to 90.1. However, it appears that the confidence felt by the UK's wealth creators at the start of the year has returned with a vengeance with June's Index score increasing to 103.3.

Since the last Index was recorded in April of this year, optimism concerning the economy across a variety of factors has risen by 12.7%. 

Reflective of this increase is the fact that an overwhelming 73% of respondents expect the UK economy to improve in the next 12 months and the majority of the entrepreneurs  we asked are planning for either growth or acquisition over the next year.

Hot on the heels of a raft of optimistic data for the UK economy, the positive sentiment that the Index has revealed correlates strongly with all of the latest headline measures for the economy that have shown that GDP is forecast to grow by 1.2% in 2013, that the UK construction sector is showing further signs of recovery and that housing activity, manufacturing and new car registration figures are on the rise. 

Most respondents welcomed the fact that the Royal Bank of Scotland (RBS) has launched  an independent review of its lending to small businesses. RBS have hired former Bank of England deputy governor Sir Andrew Large and management consultancy Oliver Wyman to examine its lending practices and say that the purpose of the review is to identify how the bank can improve its support to SMEs whilst preserving thorough lending practices. The majority of those surveyed believed that this should be a practice that all banks take note of and replicate.

Staying on the topic of lending and lending practices, it is perhaps not surprising that 90% of those questioned felt that payday lending firms should be subject to greater regulation, something that is expected to be decided on by the Competition Commission by the end of 2014.

Despite the obvious appetite for growth and the belief that headcounts will increase in most of the respondents' organisations over the coming 12 months, very few of those asked feel that the employment pool is adequately educated or trained.

This is clearly a problem and, as the economy picks up, the UK needs to produce more skilled and trained workers to maintain this trend. As CBI research recently highlighted, over 30% of businesses are frustrated by a lack of basic literacy and numeracy amongst school and college leavers. In addition, 31% reported that young people lack the technical skills they need. 

Finally, the good news on the economy is not limited to our entrepreneurs; Britain's consumers have also become more optimistic than at any time since October 2009.

Disclaimer

By necessity this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Article correct at time of writing.

Smith & Williamson LLP
Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International.

The word partner is used to refer to a member of Smith & Williamson LLP.

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