A new survey reveals that small businesses are grappling to align growth with consumer demand, while a quarter fear they lack the resilience to withstand financial shocks. The research by HSBC, as reported by the PA News Agency, indicates that small and medium enterprises (SMEs) are increasingly constrained by business and borrowing costs.
Over two-thirds of business owners stated they were unable to expand their business sufficiently to meet customer demand for goods and services in 2024, and anticipate this issue to continue into 2025. The survey included around 1,000 business owners, all with fewer than 50 employees, as reported by .
More than half reported facing challenges this year due to rising operational costs, while 22 per cent struggled with higher interest rates. This comes after Prime Minister Keir Starmer last week endorsed Labour’s previous commitment to make the º£½ÇÊÓƵ the fastest growing economy in the G7, a goal that would necessitate the º£½ÇÊÓƵ outpacing the US, Canada, Italy, Japan, Germany and France in terms of growth.
British businesses have also expressed concerns that the Autumn Budget's proposed increases in employer national insurance and the national minimum wage will significantly inflate costs. Nearly a quarter of SMEs admitted they lack the robustness to weather financial shocks, with just over half having less than £50,000 in reserve.
Approximately 28 per cent confessed to having no cash reserves at all.
HSBC's º£½ÇÊÓƵ Head of Business Banking, Tom Wood, has described it as "positive news that demand for SME goods and services remains strong, and trading conditions will become more favourable as inflationary pressures ease."
However, he cautioned that SMEs must "build resilience whilst increasing profits" to ensure they can scale up effectively to meet surging levels of demand.
