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Enterprise Index Q4 2016: Summary of survey results
SMEs are optimistic about the prospects for the UK economy in the year ahead. However, they are increasingly concerned about the lack of support from the Government according to our Enterprise Index, a quarterly survey of leading small business owners and entrepreneurs.
This quarter, confidence among SMEs in the UK economy grew five points from the previous quarter, with 50% of respondents expecting the economy to improve in the next 12 months. Optimism among business leaders in their own business’ prospects was also high, with three quarters (76%) optimistic about the year ahead.
But less than half of the respondents believe that the current government is supportive of private enterprise. This is the third quarter in a row in which our quarterly research has identified a decline in confidence in government policy. Over the past six months, belief in government support has decreased by 20% (to 49%).
Responses to our survey show that the concerns provoked by the EU referendum have plateaued. Our respondents, perhaps buoyed by encouraging economic statistics and recent stock market highs, are now looking ahead to 2017 with guarded optimism.
For most respondents, the macro environment remains a world away from day-to-day business challenges and the apparent lack of government understanding of SME issues is a particular concern. The business community has been subjected to a slew of new initiatives over the past 12 months and is expecting to face even more over the coming year. Reforms of business rates, the apprenticeship levy, the national living wage, auto-enrolment and changes to the way dividends are taxed have all had an adverse impact.
The next change on the horizon is the Government’s plan for quarterly tax reporting. This is scheduled to start for some businesses on a voluntary basis in April 2017 and will be compulsory from April 2018. In our view this should be delayed to give businesses, and their advisers, time to make the necessary changes. The challenges of complying with this new system will only add further anxiety and expense for business owners.
Appetite for borrowing has grown seven points to 41% as perceived access to finance grew by twelve points to 47%.
The responses to our survey indicate that many businesses are borrowing to invest in internal infrastructure, such as IT systems. Many respondents believe they need to have solid foundations in place to be better able to face any negative headwinds and increase their resilience. Many recognise that failing to invest in infrastructure could be just as detrimental as any negative external factors.