Small business confidence bounces back as nation re-emerges from lockdown
The proportion of UK small businesses predicting growth has almost doubled in just three months – from 14% to 27% – giving one of the first tangible indications that the government’s easing of lockdown is having a positive impact on a key area of the UK economy.
The quarterly tracking study by Hitachi Capital Business Finance goes beyond sentiment and confidence – it examines the percentage of small businesses that actually predict growth in the next three months.
Following last quarter’s report, which saw the percentage of small business owners predicting growth plummeting from 39% to just 14%, the new findings show the highest quarter-on-quarter rise in five years.
With 27% predicting growth overall, there were significant rises in the percentage of small businesses predicting moderate expansion the next three months (up from 10% to 23%) or no change (26% to 43%). This meant there has been a huge reduction in the percentage of businesses that fear contraction (down from 31% to 19%) or collapse in the next three months (down by almost two thirds from 29% to 11%).
By sector, the IT/telecoms sector had the highest proportion of small businesses that predicted growth for the three months to 30th September (44%). The biggest rises in confidence since lockdown were evidenced in and transport and distribution (up from 8% to 34%) and manufacturing (9% to 30%), where the resurgence of growth forecasts was striking. There were also significant rises in sectors hardest hit by lockdown: In retail, the percentage of small businesses predicting growth rose from 21% to 27% – and in hospitality growth forecasts rose from 11% to 16% in the three months since April.
The research also suggests that smaller, more agile enterprises will be the fastest to adapt to the UK’s re-emergence from lockdown: Small businesses that had been trading for less than five years (35%) and those that employed 10-49 employees (37%) were most likely to predict business growth for the next three months (to 30th September).
Gavin Wraith-Carter, managing director at Hitachi Capital Business Finance commented: “The latest Hitachi Capital research findings are remarkable for both the scale and the speed of the revival in small business confidence. We knew last quarter that small business confidence would fall as lockdown started and the scale of the fall was a concern, particularly the steep rise in the number of business owners fearing for their survival. Our new research – just in – shows what an immediate and positive impact the easing of lockdown has had on the small business community. Whilst bigger businesses are having to adjust and adapt at a slower pace, small business confidence across the UK has bounced back and as the engine room of the British economy, today’s figures can give us confidence that small businesses will lead the nation’s effort to rebuild the economy and secure growth.”