Skill shortages and currency weakness contribute to three year low in economic confidence of SMEs

Concern amongst small and medium sized enterprises (SMEs) regarding the current economic climate fuelled by worries over a Brexit-related skills shortages, is at a three-year high, according to the latest Zurich SME Risk Index. It now sits at 56.38, indicating almost a 2 percent rise in perceived risk since Q1 2016 (55.43), and more than 3 percent higher than in October 2016 (54.55). SMEs attitudes towards economic growth, presently sits at a four-year low – with just two in five (40 percent) businesses confident that the UK economic situation will improve over the next 12 months. Similarly, the results regarding SMEs attitudes towards the international trade environment, reveals concern regarding overseas competition and currency rate fluctuations being at its highest in four years at 45.49. Equally, workforce challenges, namely the availability of skills and talent, is also an increasing concern for smaller businesses. Two in five (40 percent) SMEs now see workforce challenges as a major concern for their business; a rise of 8 per cent since October 2016, indicating that political issues are a major influence on the current attitudes of business owners in the UK.

Paul Tombs, Head of SME Proposition at Zurich, commented:

“Uncertainty regarding the role that the UK will play in the international markets following Brexit has clearly rocked the confidence of many business owners, and initial Brexit horse-trading has done little to quell concerns.

“Resolution around movement of skilled workers and economic stability which can help address issues around currency fluctuation and foreign competition must be right at the top of the government’s agenda. Smaller businesses are the lifeblood of the UK economy right now, but we can’t expect to see increasing investment for growth without some form of resolution.”