Despite economic challenges and a slowdown in sales, UK small businesses are resolved to grow, a new survey shows.
The survey, conducted by the Small Business Research Trust (SBRT) and HSBC Bank, found that while sales growth eased back in the first quarter of 2007, both employment and investment improved.
What’s more, the report found that optimism for future growth recovered sharply, and is unusually high given the current economic conditions.
Almost half of small businesses expect sales to grow in the second quarter of 2007, 16% anticipate a rise in employment and 21% forecast higher investment.
“It is somewhat surprising that small businesses in the UK are growing in confidence, considering the increasing challenges they face from the uncertain economic climate,” said Simon Wainwright, head of business banking at HSBC.
“That they are continuing to invest and recruit more to grow their businesses shows great resilience and determination in the UK small business sector.”
However, Mark Berrisford-Smith, senior economist at HSBC warned that while it is encouraging to see such optimism prevail, this confidence may still prove to be misplaced.
He said: “While the experience of smaller businesses has closely matched that of the wider economy in recent months, it is somewhat perplexing that their expectations about their performance in the short term have rebounded so strongly.
“The balance of respondents expecting turnover to increase in the next three months climbed to 30%, compared with just 10% in the fourth quarter of 2006.
“While it is pleasing to see such optimism within the sector, with another interest rate rise just last week, and the possibility of another increase later this year, such high hopes may be disappointed.”
© Crimson Business Ltd. 2007
