Four in five UK SMEs are not seeking finance to grow in the next six to 12 months as optimism drops in the approach to 2022, research from the Association of Chartered Certified Accountants UK (ACCA) and the Corporate Finance Network’s (CFN) latest SME Recovery Tracker found.
The data reveals that accountants believe more than one in four businesses have still not returned to pre-Covid levels of productivity or turnover. Additionally, SMEs have reported a 7% drop month-on-month in their business clients looking to hire new talent, at 22% in November 2021 compared to 15.2% in December 2021.
There is also a 4% increase in those expecting to make redundancies next year, now with over one in 10 businesses expecting to make personnel cuts, from 8% in November 2021 to 12.4% in December 2021.
Additionally, with increased Covid-19 restrictions over the New Year, the data reveals the small business economy is threatened by security and stability. Over the last month, there has been close to a 10% drop in the number of businesses that are expected to still be trading in 12 months, from 93% in November to 83.8% in December 2021.
Meanwhile, the research uncovered that UK SMEs are not receiving the support or financing they need to recover from the pandemic, leading to “worrying” financial trends such as a reliance on short-term financing like business overdrafts.
Claire Bennison, head of ACCA UK, said: “These continuing financial issues are resulting in long-term damaging impacts on the wider UK economy. Our research revealed that financial restrictions are the number one reason holding businesses back from putting a sustainability strategy in place.
“Without the right financial support for the SME economy, the UK as a whole is not going to move forward in becoming a leader in innovation – either in technology or sustainability – and that is a concern.”
Kirsty McGregor, founder of the CFN, added: “There are some major impacts coming in the new year, including business rates increases, an uplift in the national minimum wage, and the new health and social care levy introduction in April adding up to 2.5% to payroll costs, all of which will have a further negative impact on these struggling SMEs.
“As we head into another period of increased Covid-19 restrictions, I am concerned about the future of the UK SME economy and call on the government to review their policies to provide longer-term support until this period of uncertainty is over.”