Close Brothers Asset Finance’s Business Sentiment Index (BSI), which measures SME business confidence, has risen for the first time since September 2021 following three consecutive falls, and a low at the end of 2022.
These were caused, in the main, by rising inflation, energy cost increases and higher interest rates. Despite the headwinds still being faced by SMEs and inflation stubbornly remaining in double digits, wholesale energy prices have fallen from their summer 2022 peaks, and there appears to be more certainty about where interest rates rises are headed.
The NACFB Patron’s research revealed that business priorities remain to achieve growth (28%) and managing costs (26%), well ahead of issues like paying down debts (9%) and business consolidation (9%).
Overall, SME appetite to invest remains strong – as it was at the end of 2022 – with three-quarters of UK firms looking to seek funding for investment in the next 12 months, up from 67% in July 2022.
Neil Davies, CEO of Close Brothers’ commercial business, said: “It’s encouraging to see an element of positivity returning to the market, no matter how tentative.”
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