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New research by Yorkshire Bank has revealed SMEs in Yorkshire are ready to invest more than £8bn into the UK over the next 12 months as confidence in the economy grows
The multi-billion pound investment drive by Yorkshire SMEs includes staff training, new equipment and creating new jobs.
An online survey of 1,168 UK SMEs, carried out by Opinium Research, found 89% of Yorkshire based businesses said they plan on making significant investment in their businesses during the next year. On average, they plan to invest around 8% of turnover back into their business. This equates to around £8bn to the Yorkshire economy.
It is believed the investment is being driven in part by growing confidence in the UK economy. Yorkshire SMEs are expected to grow by 11%, leading to an improved confidence and ambition among Yorkshire SMEs. However, the survey recognises a number of barriers to growth including lack of available finance.
Regional director for Business and Private Banking at Yorkshire Bank, Alan Young, said; “Compared to this time last year, we believe an increasing number of businesses are now preparing themselves for growth. New staff, premises and equipment are the tools which will allow businesses to create that growth.”
This improved confidence in the economy can be seen across other parts of the UK not just Yorkshire. The North East, Scotland and the East Midlands are all showing signs of growth.
A recent report ‘Your Business Outlook 2014’, published by Baker Tilly, surveyed 750 SMEs in the UK about their priorities and expectations for 2014. The report found 55% of SMEs in the North West are expecting to increase their turnover by at least 5% this. They also discovered 42% of businesses in the North West said whilst they were confident about opportunities for growth in 2014, they were reluctant to invest in resources. 70% said they didn’t want to take on any more debt to expand. After the economic downturn, it isn’t surprising some business owners are cautious about growth, expansion and reinvesting turnover. For some business owners, this renewed optimism isn’t enough to risk investment.
Some business analysts have highlighted concerns that if SMEs don’t take advantage of growth and investment opportunities, the wider economic recovery could potentially remain uneven. As larger companies are expanding and taking a longer term strategy for growth.
The SME Pulse report, carried out by Aviva, surveyed 500 SMEs and found businesses recognise the need to diversify. 68% of people who took part said trading conditions in 2013 were as they expected. However, a third stated that they were harder than they expected.
Some of the primary concerns for SMEs the report uncovered include maintaining cash flow and stopping sales decline. The report asked those taking part what they thought the Government could do for SMEs, 33% said cutting red tape for tax and accounting. While 30% said reducing VAT, 24% answered encouraging banks to lend and 23% suggested reducing corporation tax for SMEs.
According to the CBI, optimism amongst small manufacturing businesses has reached its highest level since they started recording in 1988. It has also emerged the UK is predicted to be the strongest performing major economy in Western Europe this year. The latest forecasts by the European Commission show the UK economy is set to expand by 2.7% this year. While there may be an air of optimism in Yorkshire and the rest of the UK, not everyone has recovered from the downturn.