Geography of Brexit Affecting SME Confidence

Photo by Michael Duxbury from Flickr

A split regarding the economic outlook between the areas which voted to to remain in or to withdraw from the European Union was revealed by survey that was conducted among small firms.

According to the SME Growth Tracker, companies in areas which primarily supported Brexit have been consistently more optimistic as compared to those which favoured staying within the economic bloc after the referendum.

Small and medium sized companies (SMEs) in the West and East Midlands, which voted leave during the Brexit referendum have reported more confidence compared to those that are in remain-backing London and Scotland.

With London and Scottish SMEs predicting higher growth compared to their counterparts in the leave area, Mark Pragnell of Capital Economics stated: “Confidence does not appear to correlate with revenue growth expectations.”

The findings of the survey also revealed a small improvement with regards to the general confidence of small businesses. However, there was a still a negative score for the overall confidence among the firms. This was said to be the fourth consecutive three-month period in which the companies had signified a negative outlook.

SMEs reported a increase of 1 percent in their revenues and an increase of 0.3 percent in employment. This implied an improvement in terms of productivity amounting to 0.7 percent over the last 12 months.

Expectations are set for an increase of 1.5 percent in revenue in the coming year and another 0.9 percent increase in jobs, despite the record low of the levels of unemployment. The predictions were similar to those that come from firms during the last three months of last year.

Political uncertainty was not delaying the majority, 73 percent, of the decisions of the businesses in the wake of the result of the referendum. However, some 13 percent reported that they had held off welcoming new hires, and 7 percent had halted their plans for international expansion. The largest Brexit-related concern for companies was that it could force up the costs of supplies.