While business confidence remains high, small and mid-sized businesses are less optimistic about the UK economy two months ahead of voting day
Companies continue to be optimistic about their own business prospects despite looming uncertainty around the outcome of the EU referendum.
According to research from the Quoted Companies Alliance and BDO, net optimism has increased from +19 per cent to +28 per cent since the last survey was conducted in September 201. Staff hiring intentions remain high with two in three of quotes SMBs intending to recruit staff over the next 12 months. If this is followed through, the workforce could increase up to 8 per cent. Indicative of this optimism, sales forecasts for the next 12 months are at a near-record level, with expected turnover set to grow 15.7 per cent.
Tim Ward, chief executive of the Quoted Companies Alliance said: “Whatever the outcome of major political events, such as the UK referendum, it seems that small and mid-size quoted companies will just get on with running their businesses. The majority see some benefit in staying in the EU rather than leaving. Most are preparing for either eventuality.”
Despite these positive indicators, the EU referendum has cast a lot of doubt on the confidence of these businesses in the UK economy. Both companies and advisers are less confident in the economy now than they were in September last year. Net optimism about the UK economy has plummeted from -18 per cent to -55 per cent among companies, potentially fuelled by the media hype around the Brexit “fear factor”.
Regardless of the uncertainty caused by the referendum, close to half (48 per cent) of companies intend to raise capital over the next 12 months, an essential element in growing businesses.
The survey also revealed evolving sentiments about the EU since September. More than half of companies believed UK membership of the EU had a positive impact on their business then, compared to just 43 per cent who feel the same now. Companies believing that there is a negative impact from EU membership have increased from 9 per cent to 20 per cent.
According to Scott Knight, partner at BDO, these figures are indicative of how divisive this issue is for British businesses. “Whilst fewer small and mid-size quoted companies think that the EU benefits their businesses, there is a majority who still believe this. There is an increase in numbers of companies thinking that it has a negative impact and we are beginning to see a polarisation of views,” he explained.
In addition to this, a significant minority (22 per cent) of the surveyed businesses are yet to make up their minds.
Most small and mid-size quoted companies are gearing up for voting day by allocating resources to prepare their business for a possible EU exit: 79 per cent of companies have made some form of preparations and 53 per cent seeing themselves as being very or reasonably prepared.