SMEs in the Eye of the Hurricane

SMEs Show Signs of Confidence Despite a Worsening Financial crisis

Despite a worsening economic outlook, research among SMEs shows a marked rise in confidence over the last two months.

UK200Group, comprising 600 legal and accountancy partners across the UK, surveyed over 400 SMEs in a variety of sectors at the end of March and the end of June.

Only 13% are concerned about survival, compared with 29% in April. 33% now think the situation is ‘pretty much as normal’, up from 16% April and 15% say the situation is better than it would have without the crisis compared with only 1.5% in April

48% of SMEs have ‘written this year off’ but think they will survive, down from 53% in April

But Andrew Jackson, Head of Corporate Tax at Fiander Tovell and Chair of the UK200 Group Tax Panel, warns against false optimism.

“While many, but not all, have benefitted from furlough payments and grants of between £10,000 and £25,000, the unfortunate truth is that that SMEs are caught in the eye of the hurricane”.

“Large scale redundancies are only now hitting the headlines. Come the autumn, the effect of widespread unemployment across every sector will we predict show this self-confidence to have been a false dawn.

“SMEs must use this period to prepare, to get to grips with their debt financing and cash flow. Hard decisions about staff numbers must be taken, and MDs should factor in the knock on effects of continued COVID-19 disruption and further lockdowns and the possibility that a no deal Brexit at the same time. We are working hard with SMEs and the government to use this time to find ways to make sure that as many businesses as possible can come out of the crisis is as good as shape as possible.”