The report, commissioned by Enterprise Nation and Amazon, and informed by a YouGov survey of over 1,000 SMEs, found that the flagship metric - the SME Confidence Index – declined to -8, down from +5 when surveyed in September last year.
The SME Confidence Index score for the UK economy is also down from -13 in September 2016 to -22 in September this year. Despite weak confidence, SMEs remain upbeat about their own growth prospects, forecasting +1.6% revenue growth, +0.6% jobs growth, and +0.9% profits growth over the coming 12 months.
“We’ve seen noticeable changes to the confidence of SMEs after key moments in the political calendar over the last year,” explained Mark Pragnell, chief project economist at Capital Economics. “A year ago, shortly after the EU referendum vote, SME confidence in their own businesses was positive. However, over the last 12 months SMEs have witnessed a series of key political moments, from the triggering of Article 50 through to the snap General Election, which may have contributed to the swing of confidence from +5 in September last year to -8 now. It, however, remains encouraging that they continue to forecast positive revenue and jobs growth in the year ahead.”
The greatest perceived risks to growth over the next year according to small business owners are political uncertainty and higher price inflation. Nearly three-quarters say they have not delayed any business decisions as a result of Brexit, but on balance, SMEs say in 12 months’ time that Brexit will likely have more of a negative impact (39%) than positive impact (12%) on revenue. Supply costs were seen to be most likely to be negatively affected by Brexit, followed by profits, and jobs.
Looking ahead to post-Brexit Britain, SMEs believe the government must prioritise negotiating a new trade deal with the European Union over any other region or country, with over half of exporting SMEs saying the EU was one of the regions that contributed most to their export revenue in the past year.
Small business owners also reflected this sentiment when asked what EU single market freedom was most important. Free movement of goods was cited as the most important, followed by free movement of services, free movement of capital and lastly free movement of people.
Emma Jones, founder of Enterprise Nation, said: “The small business owners I speak to every day are generally positive, upbeat entrepreneurs who thrive in the face of a challenge and are flexible enough to adapt to changes in the political and regulatory landscape. However, this doesn’t mean they should be taken for granted, so I hope the government looks closely at these views from the small business community and takes them into consideration throughout the Brexit process.”
Doug Gurr, UK country manager at Amazon, added: “It’s clear that embracing the digital economy is crucial for small businesses looking to mitigate risks to their business and grow at a faster rate. The annual report shows that small businesses want the ability to easily export to the EU and beyond. As a global business that provides UK businesses with access to international opportunities, we’ll continue to focus on tools and services that help SMEs export to the EU and around the world long-term.”
