According to a survey, small-business owners are more optimistic about their prospects than ever, which adds to the evidence that the British economy’s outlook may not be as grim as it was thought.
Barclays commissioned a poll of small- and medium-sized businesses to find that 41% were optimistic about their outlook. This is the highest level since last year’s second quarter. Fivety-five percent expected to increase revenue this quarter, compared to a year ago. A third planned to hire more employees in the next twelve months.
The quarterly SME Barometer from Barclays gives an insight into sentiment at smaller companies throughout the country. The latest survey surveyed 603 managers between January 20th and February 1st.
This comes amid turmoil in the wider economy, as the Bank of England scrambles for lower inflation by quickly raising interest rates. Inflation in consumer prices reached a 41-year record high of 11.1 percent in October. However, it had dropped to 10.1% for the third consecutive month by January. To combat the escalating prices, the Bank raised its base rate from a record-breaking 0.1 percent in late 2021 to an unprecedented 4% this month.
Inflation spike and rising borrowing costs led to expectations that the economy would enter recession in this year’s economic cycle. The Bank predicted a mild recession this month, whereas it previously warned that the UK would experience its longest recession in 100 years.
The increased energy prices and the Russian invasion of Ukraine have pushed inflation higher. Barclays’ survey revealed that energy costs are a major concern for smaller businesses. 73% of respondents reported that they were worried about the price of electricity, and 54% said that they were trying to reduce their consumption to lower their bills.
Only 15% of respondents stated that they are pessimistic about business prospects.
Colin O’Flaherty is the head of SME at Barclaycard Payments. He said that it was encouraging to see more businesses express optimism about their prospects and invest to ensure their future revenue streams.