With Brexit uncertainty rising UK SMEs are the least likely to invest in their businesses during the remainder of 2019 compared to their global counterparts.
The latest Global Business Monitor from Bibby Financial Services report found 29% of UK businesses do not plan to invest the rest of the year, compared with just 8% in the US.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
David Postings, global chief executive at Bibby, said: “It is evident that UK SMEs are anxious about investing over the coming months as a no-deal Brexit becomes a possibility.
“This is damaging to the economy at a pivotal time for the country. The UK is a highly sentiment-based economy, and its confidence that fortifies supply-chains, generates business orders and creates jobs.
“UK and Irish businesses need certainty over tariffs and supplier relationships. Without this, capital investment will continue to be subdued, stifling output even further.”
The report also outlined UK SME confidence has fallen 10% since 2017 and two thirds have not seen business growth in the last year, with 27% seeing a reduction.
Based on a survey of businesses across 13 regions worldwide, the report offers insight into the opportunities and threats faced by SMEs.
This covers the ongoing trade war between China and the U.S., with Brexit featuring as the top two concerns over global economic growth.
In Ireland more than 72% believe Brexit is the greatest threat amid talks over the Irish border. Nearly two fifths of Irish SMEs said they are considering export markets beyond the UK in the wake of Brexit.
Ludovic Subran, global chief economist at Euler Hermes, said: “No matter what the political outcome of the Brexit negotiation is, the scarring effect on SMEs is visible. We expect a technical recession at the turn of the year because of excessive contingency stockpiling which will trigger a fall in production over the next 6 months.
He added: “Growth should remain weak, at 0.8% in 2020, which should feed into higher non-payment risk. Business insolvencies should increase by 5% in 2020, for the third consecutive year. Targeted measures help British SME bridge the profitability gap may be needed.”
