SMEs 'optimistic for growth'

Small to medium-sized enterprises (SMEs) in the UK are confident about their prospects for growth in 2014 but reluctant to invest too heavily in expansion as the economic climate remains lukewarm, according to new research from Baker Tilly.

The organisation found 45 per cent of SMEs feel positive about the coming year, with almost half expecting to increase turnover by five per cent or more in the next 12 months.

Despite this, 84 per cent of respondents expressed their unwillingness to take on any more debt in an effort to expand.

Neil Sevitt, partner at Baker Tilly and SME specialist, said the increased levels of optimism are obvious but questioned how firms anticipate pushing for growth with such a risk-averse attitude.

"There should be more emphasis on research and development and more time dedicated to exploring international opportunities. Businesses also need to have confidence in less traditional funding options," he added.

SMEs in London are the most optimistic when it comes to growth, understandably, but Midlands firms proved to be the least confident with only 39 per cent expecting expansion over the course of 2014.

With only 18 per cent of firms planning to take on new staff and 20 per cent hoping to increase capital expenditure, it is unclear how the roots for recovery are going to take hold.

Furthermore, 90 per cent of businesses had no intention of taking on board any of the tax incentives offered by the government, suggesting more needs to be done to publicise these initiatives if they are to help the economy improve.

"There is real concern that if SMEs do not take a long-term view and ignore opportunities for investment and expansion, economic recovery will remain hesitant and uneven. Businesses need to take more courageous and strategic decisions," added Mr Sevitt.

This follows a YouGov survey showing almost two-thirds of SMEs have not sought additional finance over the last year, with debt concerns a major factor in this decision.