With the New Year comes ambitious business objectives and proposals. However, research from Together – the specialist lender* forewarns of the significant investment challenges UK SME business owners have no choice but to face head on in 2023.
The outlook from SMEs regarding investment next year is far from positive:
- While UK SMEs invested an average of £565,000 in 2022, this was substantially less than the planned investment of £710,000 due to the rocky economy – without intervention next year’s investment could be even less
- Businesses are and will continue to struggle with the cost of fuel (37%), rising cost of raw materials, labour, and transportation (34%), difficulties in recruiting and retaining staff (28%), global supply chain issues (27%) and high taxes (26%)
- Nearly a third (30%) have delayed expanding their workforce this year, 29% have built up cash reserves as a contingency and 26% have reduced their staff headcount or are not replacing workers who’ve left harming growth opportunities in Q1 2023
- In addition, two thirds (67%) have shelved plans to improve business energy ratings with 20% delaying installing solar panels, 18% delaying upgrades to lighting and 17% pausing on plans to improve heating, ventilation, and air conditioning due to the ongoing uncertainty over the UK economy
Chris Baguley, Corporate Managing Director at Together, said: “Thorough and direct intervention from the government to financially support the growth ambitions for UK SMEs is currently lacklustre. With the CBI’s economists already forecasting the UK’s recession will last until the end of next year and fears of “stagflation” mounting – the picture for 2023 is far from positive.
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“Our research makes clear how business leaders have been hit hard this year, with many of their problems not yet at their pinnacle. Every day, across the country, companies are struggling to make ends meet, let alone having the time or capacity to grow.
“With just a few days left before we enter a New Year, a long-term plan to clarify how the government will support UK businesses and entrepreneurs is still missing. This will only worsen fears of being able to pursue growth ambitions next year and could result in many having no choice but to make some very tough decisions before the year ends.”
* Research commissioned by Together and conducted by Opinium research between 18th and 25th October of business leaders from 300 UK SMEs (6-250 employees).
