Small business confidence grows across the country

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UK firms are gaining confidence

An increasing proportion of small to medium-sized enterprises (SMEs) across the UK are reporting confidence in their ability to expand and grow over the coming year, new research has shown.

According to Hitachi Capital’s latest quarterly British Business Barometer for the three months to the end of December 2015, the proportion of UK SMEs with ambitions of growth during the coming year now stands at 40 per cent - this is in comparison to 36 per cent of respondents who made this claim during Q4 2014.

It is, however, a result that remains three percentage points lower than during Q2 this year.

Overall, 25 per cent of all UK SMEs - the equivalent of 1.35 million firms - are now expecting to take on new staff and increase the size of the company within the next 12 months, while a further 56 per cent of respondents (3.02 million firms) believe their position will remain largely unchanged in 2016.

Meanwhile, the results also revealed that more than half (54 per cent) of small business leaders now believe that the worst is behind them in terms of the impact of the economic downturn and the subsequent recovery, with a strengthening business outlook being forecast for the coming year.

Furthermore, one-fifth (20 per cent) stated their belief that their business is "prospering" in the current financial climate - providing even greater strength to the argument that many businesses believe the future is bright at present.

Gavin Wraith-Carter, general manager at Hitachi Capital Business Finance, said: "Whatever the economy holds for us all in the next three to five years, one thing is evident - there is confidence in the SME market.

"Although confidence is not on a par with Q2 this year, problems in the EU, the steel industry and agricultural sector in particular will have changed the economic landscape for a significant number of Britain's small businesses.

"This quarter's more cautious attitude to growth may be a sign businesses are taking a 'wait and see' approach and are striving to achieve steady rather than ambitious growth."

Mr Wraith-Carter concluded that whatever a company's plans for the future, it remains essential that businesses of all sizes are regularly assessing their financial options to ensure they have the necessary facilities in place to expand their operations when the best opportunities arise.

Cautious optimism therefore typifies the outlook for many SME leaders heading into the new year, with plenty of reasons to bring some festive cheer to the start of 2016 and to the months that follow.