Financial SMEs less gloomy than average

Financial SMEs less gloomy than average

In the wake of the UK’s general election, decision-makers at small and medium sized enterprises (SMEs) have materially lower confidence than ever before, though financial firms are less gloomy than the average.

This trend is revealed in Capital Economics' second quarter SME Growth Tracker, as the UK looks to navigate its way out of the European Union (EU), while ensuring British industries retain confidence that the UK will thrive outside the EU and is still open for business.

Commissioned by Amazon UK and Enterprise Nation, it is based on a YouGov survey of more than 1,000 British SMEs.

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In the financial services sector, the report found that despite the devaluing of the pound and the issue of the UK banking industry potentially losing its passporting rights in the wake of Brexit, SMEs saw the greatest rise in profits over the past 12 months (1.3 per cent).

They also expect the greatest increase in profits over the coming 12 months (1.9 per cent). In the first quarter 2017 growth tracker report, financial services SMEs also expected the highest profit growth for the following year.

Apart from in the hospitality and transport sector, SMEs in financial services expected their business conditions to deteriorate the least (-6), well above the national average of -11, and the retail sector at nearly -20.

Overall, SMEs in the UK expect others in their industry and the British economy generally to fare badly.

All industries are pessimistic about their sector’s future business outlook, and expect some form of deterioration in the coming year.

But Dennis Hall, managing director at Yellowtail Financial Planning, said he is feeling "much the same" about prospects for the next 12 months as for the past 12 months.

"Financial services firms are more confident than many other sectors and  this is a lot to do with the pension freedoms rather than Brexit concerns.

"Many IFAs are still seeing an uptake in business as a result  of the pension freedoms and this is set to continue unless the Chancellor does something radical in his Budget."