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Mixed picture on the post-lockdown bounce back

Studies by business organisations suggest that SME confidence is rising but many firms still plan to make redundancies.

There are encouraging signs of a bounce back as the proportion of UK small businesses predicting growth has almost doubled in just three months – from 14% to 27% – according to the latest quarterly tracking study by Hitachi Capital Business Finance.

It means that one in ten firms now fear failure compared to close to a third of small businesses three months ago. The findings show that:

  • 23% predict moderate expansion (up from 10% in the previous quarter);
  • 43% expect no change (up from 26%);
  • 19% expect a contraction (down from 31%);
  • 11% fear business collapse (down from 29%).

By sector, the IT/telecoms sector has the highest proportion of small businesses that are predicting growth for the three months to the end of September (44%). The biggest rises in confidence since lockdown have been seen in transport and distribution (up from 8% to 34%) and manufacturing (9% to 30%).

There have been significant rises in sectors hardest hit by lockdown: In retail, the percentage of small firms predicting growth has risen from 21% to 27%; in hospitality, growth forecasts rose from 11% to 16% in the three months since April.

The research suggests that smaller, more agile enterprises will be the fastest to adapt to the UK’s emergence from lockdown. Small businesses that have been trading for less than five years (35%) and those that employ 10-49 employees (37%) are most likely to predict business growth for the next three months.

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