London leads the way: SME confidence rebounds to nine month high after 50,000 firms folded last year
Confidence among small and medium-sized businesses (SMEs) continues to grow across the UK, with London leading the way, new data out today showed.
60 per cent of respondents in the capital expect their revenue to grow this quarter while they intend to make 12 new hires this quarter, according to Barclays SME Barometer.
London is ahead of the rest of the UK, which has a national national average of 55 per cent expecting revenue to grow and an average of just seven new hires.
Across the country, 41 per cent of SMEs were optimistic about the prospects of their business, the highest level in nine months.
Only 15 per cent of SMEs maintained a pessimistic outlook for their own prospects. In London, this figure was only eight per cent.
While SME confidence was improving, the proportion feeling optimistic about their business was still lower than the 49 per cent recorded at the beginning of last year.
73 per cent felt worried about their energy bills, with more than half looking for ways to reduce the amount of energy they use.
Can more SMEs avoid folding?
The strength of the domestic economy topped the list of concerns cited by small business leaders with 15 per cent citing concerns. Inflation followed at 12 per cent.
More than 50,000 SMEs folded in London last year as inflation, increased borrowing costs and sky-high energy bills cut through the sector. Inflation in the UK took off last year, reaching double digits in August and causing the Bank of England to hike interest rates to slow the economy.
In October last year, it was reported that over half of SMEs had taken out personal loans to fund their business.
Like all businesses, small businesses were hit hard by the spike in lending costs following Liz Truss’s disastrous mini-budget. In the third quarter of 2022, just 33 per cent of SMEs were optimistic about their own prospects.
Colin O’Flaherty, Head of SME at Barclaycard Payments, said: “It’s encouraging to see more businesses reporting optimism about their prospects going forward and investing to future proof their revenue streams.
“Whilst SMEs remain optimistic, the impact of the wider economic climate means support for our local SMEs is key to navigating any further challenges that may come their way.”