28 Oct 2011 | Tim Ward
THE QUOTED Companies Alliance, in conjunction with BDO, has just launched its inaugural quarterly survey of the small and mid-cap quoted community. It is aimed at tracking the relative confidence levels of companies and their advisers in this important sector.
In our first survey, there is a general pessimism towards the UK economy's outlook, with an average score of 39 out of a possible 100. But it is interesting (and perhaps counter-intuitive?) to see that companies feel optimistic about their own prospects over the next 12 months, with an average optimism score of 64.
The divergence reflects a trend where companies, despite feeling secure about their own projected growth, are questioning the state of the UK's broader economic health and the implications for this.
More than half (60%) of small and mid-cap quoted companies are telling us that the capital markets are hindering their growth plans. Of those saying markets are hindering their projected growth, more than three quarters (76%) of small and mid-cap quoted companies cite a lack of liquidity as the principal reason for this. Just 14% say that capital markets are helping.
Small and mid-cap companies' lack of confidence in the UK's economic recovery is exacerbated by a perceived absence of governmental support. Only 4% of companies believe that the UK government views small and mid-cap companies as a priority.
It's clear to me that small and mid-cap quoted companies believe that the Government could do much more to foster an environment to help them raise the finance they need to grow and create jobs. The majority of companies feel that regulation is going to increase over the next 12 months which is at odds with the Government's current anti-red tape agenda. Real change is required from our policymakers and market providers to improve the channels of finance to these companies which are a key source of growth for the UK.
So what do companies want Government to do? Almost half (49%) want tax incentives introduced for investors in small and mid-cap quoted companies and 23% want regulation reduced. These findings validate the Quoted Companies Alliance campaign for capital gains tax reform so that all people that contribute to a business, not just those that own 5% of shares, can get the tax relief.
On a more upbeat note 77% of companies tell us that they expect to see turnover grow, with an average expected growth of 15%. And a majority (62%) also expect to be hiring over the next 12 months, increasing their workforce by an average of 6.9%.
Do you agree with these headlines?
If you'd like to take part in our next survey or would like a copy of our survey report please email me at email@example.com.
Tim Ward is Chief Executive of the Quoted Companies Alliance (QCA), the membership organisation of the small and mid-cap quoted sector.
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