Brit firms more optimistic than global rivals amid rising costs
BRITISH small and medium businesses are more optimistic than global rivals, despite rising costs.
A poll of 12,000 small firms around the world by accountancy software firm Sage found that 71 per cent of those in the UK were confident of business success.
More than two-thirds also expect their revenues to stay the same or increase next year — a 14 per cent increase on a year ago.
Around 60 per cent of companies said they have suffered rising costs this year, compared with just a quarter in 2022.
But many said they are working more efficiently to manage their budgets.
Increased efficiency, better quality staff and bigger customer numbers were the biggest drivers of business confidence, according to the Sage survey.
Those who invested in equipment reported an average doubling in productivity, while those who adopted new technology saw an 84 per cent increase.
Autumn Rabbits, owner of Alnwick-based cake studio Plumb And Rabbits, said: “Despite the increased costs of ingredients — which have been huge for a baker and cafe owner — I decided to move forward rather than stay still. This meant relocating to a new and larger site and doubling my staff.
“It was daunting but I have never been as optimistic about my business.”
Paul Shrimpton, owner of Nero Black Alpaca in Hexham, Northumberland, said: “Despite the pandemic, Brexit and export restrictions, we have still managed to progress our business beyond our expectations.
“Investment we made two years ago is now delivering real value to the business.
“We’ve expanded into stud fees and holiday lets.”
Ryan Panchoo, owner of gluten-free, vegan doughnut firm Borough 22, in Borough, South London, also told Sage he was optimistic about future growth.
In the UK, 40 per cent of small firms predict they will feel “very confident” about the success of their business at the end of this year, better than the 34 per cent global average.
This is partly due to an expectation that costs will start to fall in the second half of the year.
But UK firms only plan to increase tech investment by 13 per cent over the next 12 months — less than their European or US peers.
Julian David, chief exec of TechUk, said: “It is important that this is addressed by the Government to ensure small firms have the tech and skills they need.”
Banking on debts
VIRGIN Money shares slipped four per cent yesterday after the bank said it was putting aside £144million for bad customer debts — six times more than last year.
Half year pre-tax profits dropped by a quarter to £236million.
Meanwhile, US regional banking shares tumbled with Pacwest halving in value yesterday as it confirmed it was in talks on a potential sale — days after JP Morgan gave a lifeline to First Republic Bank.
Shell’s £7.6bn profits in 3 month
SHELL bosses yesterday dodged questions on whether its profits of £7.66billion in the first three months of the year could fuel calls for harsher windfall taxes on oil giants.
The profits, helped by its lucrative and secretive trading arm profiting from volatile gas prices, prompted Shell to announce a new £3.2billion share buyback.
This was on top of £5billion of awards it has already handed investors this year.
By comparison it expects to pay just five per cent of its investor awards, £398million, in the Government’s energy profit levy.
The Unite union said profiteering was “practically untouched by Rishi Sunak’s so-called windfall tax”.
Shadow Chancellor Rachel Reeves said the buyback was evidence “the Tories refuse to bring in a proper windfall tax on oil and gas giants to freeze council tax this year, as Labour would.”
In response to the threat of a Labour government, Shell boss Wael Sawan said: “It’s important they recognise that we make investment in the UK.
“Our payback on investment is over ten years.
“We rely on the support of our long-term investors.”
Slice of the action
A QUARTER more of Domino’s customers now collect orders to save cash.
It posted a 5.6 per cent sales rise in the past three months to a record £386.6million.
The chain said orders grew 2.5 per cent, helped by its £12 for a large pizza deal.
Summer gloomy for Next
THE boss of Next is bracing for shoppers to rein in their spending this summer, despite the retailer’s sales holding up better than expected.
It yesterday posted a 0.7 per cent fall in total sales for the past three months, a smaller drop than the two per cent analysts had predicted.
The figures show the biggest chunk of growth is a 7.4 per cent rise in its finance income as customers turn to more credit to afford their purchases in the cost-of-living crisis.
Its online retail sales were down by 1.6 per cent while shop sales dropped 0.6 per cent.
Next still reckons the next three months will see sales slow by three per cent and for profits to be lower.
Boss Lord Simon Wolfson justified his gloominess by saying Next had last year benefited from unusually warm weather — which boosted sales of its holiday fashions — pent-up demand for weddings and prom outfits as Covid restrictions eased.
‘Time for tax breaks for smaller firms’
ALTHOUGH SAGE is a FTSE 100 company we serve two million small and medium firms around the world, hundreds of thousands of which are in the UK.
Much Government focus has been on big business, but small and medium firms employ three-fifths of the workforce and generate almost half of private sector turnover.
Despite the odds, they’ve shown astonishing resilience and 84 per cent are bullish about their future.
They have been nothing short of heroic, keeping our economy afloat during these tough times.
Now, the Government needs to step up and give them the boost they deserve.
But here’s the reality: higher costs have left them cash-strapped at a time when they need to invest in their businesses and the very technology that would catapult them to the next level.
As our economy races towards digitisation — just look at ChatGPT — we can’t afford to leave our small firms behind.
If they’re not part of the digital economy, they risk not being part of the economy at all.
The solution is clear.
It’s time for the Chancellor to provide tax incentives for small firms to invest in digital technology, in the same way as there is support for them to invest in machinery and equipment.
By investing in small and medium businesses, we’ll spark the economic growth that benefits everyone and lay the groundwork for a Silicon Valley future for the UK.
- By Steve Hare