THE MOST RECENT SET of GDP figures from the Office of National Statistics confirmed that the UK economy has returned to growth, with initial estimates coming in at 1%. The figures represent the biggest rise in five years, but can this simply be attributed to the wave of positivity which swept the nation around big-ticket short term events such as the Olympics and Diamond Jubilee, or is there a genuine return to confidence for the UK economy and business owners’ nationwide?
The results of the latest Sage Business Index survey – a global study of over 10,000 small and medium-sized firms including 1,300 in the UK – revealed that business owners in this country are feeling increasingly confident about their prospects and the future of the economy. This bucks a near-universal global decline in confidence amongst other business owners in their local country economies.
While this would suggest that events in the UK did have some impact on confidence levels, the study also found that confidence in their individual business’ outlook for the next six months is at an all-time high, and that an overwhelming majority of UK companies perceive themselves to be among the most versatile in Europe. Four in five (81%) UK business owners believed they had successfully changed their working practices to meet the challenges of the current economic climate – second only to Switzerland, which has one of the most stable economies in the world. In fact, seven out of ten UK business owners reported revenue had either increased or held steady over the last six months.
Best of British
When questioned about the most favourable aspects of doing business in Britain, business owners also recognised that the overall business culture, entrepreneurial spirit and infrastructure showing the conditions for on-going growth are grounded in strong foundations. There is, however, room for improvement. The government could increase support it provides to small and medium sized businesses, with just 17% of business owners believing the government is doing enough for this key market.
Similarly, more than half (53%) believe government bureaucracy is the single worst thing about doing business in Britain, outstripping tax rates (41%) and access to finance (37%). Despite the government’s growth agenda regularly citing the reduction of red tape for start ups and small businesses, it’s clear bigger steps need to be taken in this area to create conditions for businesses to thrive and build on this latest show of optimism.
While the past year has been exceptional for Britain, the long-awaited return to confidence has a solid grounding in the improved conditions for UK businesses and one which the government has the opportunity to capitalise on by heeding the call from small to medium sized businesses. Cutting red tape, reassessing the tax system and continuing to work with banks to find a workable solution to the funding gap that hampers the early growth of start-ups will free up entrepreneurs and help them realise their business potential.
A copy of the Sage Business Index can be found here.
Brendan Flattery is CEO of Sage UK and Ireland.