AXA: SMBs scaling down growth plans

Thursday 8 December 2016

With 2016 now almost at an end, many businesses are putting together their plans for 2017. 

Due to the impending Brexit negotiations, companies are increasingly wary of their financial situation and what needs to be done in order to stay productive and cost-effective in the light of leaving the EU. 

According to a study from AXA Business Insurance, 50 per cent believe leaving the trading bloc will have no impact at all, while 14 per cent anticipate doing better as a result of the decision. 

As well as this, the survey found a drop in growth expectations for 2017, while just 42 per cent of small companies anticipate growth in 2017. This is compared to a high of 63 per cent at the end of 2013 and 55 per cent in 2015. 

The research found that only ten per cent of small businesses will take on new employees in 2017, marking a fall from 38 per cent three years ago. As well as this, the number of people planning to invest in business assets have fallen from 52 per cent to 29 per cent. 

Only four per cent of small companies believe they can seek finance through government-supported schemes, along with just 0.8 per cent from the British Business Bank. 

Darrell Sansom, managing director of AXA Business Insurance, said: “We’ve found time and again that small businesses are taking personal loans, credit cards and overdrafts as their main source of finance, rather than turning to the schemes designed for them.

“The money pledged for small businesses in the Autumn Statement has to be welcomed, but if they don’t receive some reassurance about the economy in the longer term,they won’t want to over-commit themselves by taking this finance on.”

What is the forecast ahead of leaving the EU?

Mr Samson explained that many businesses are responding coolly to the uncertainty, but some are stalling plans for future growth. 

With many companies unsure of what will happen in the coming years, it will be interesting to see how the business climate changes as Brexit unfolds. 

At the moment, small firms are left waiting anxiously to see what the decision will mean for their future. Independent professionals in particular could be affected, especially if they have colleagues based in the EU. 

Overall, until Article 50 is triggered and the process to leave the union begins, industries will need to carry on as normal until any potential damage materialises.  

By Victoria McDonnell

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