CONFIDENCE among small- and medium-sized enterprises (SMEs) hit a record low in the second quarter of 2019, research claims.
CYBG’s SME Health Check Index – a quarterly measure of performance and outlook for UK small businesses – fell by 6.9 points to 41.9 in the second quarter of 2019.
This is the lowest score since the data collection began in 2014 and there was also a 6.9 point fall between the first and second quarter – the largest quarterly drop in almost two years.
The lender said the reduction was driven by SMEs coping with increased costs and declines in capacity and confidence.
The lending indicator also dropped to a 15-month low of 58, with overdraft and loan balances dropping by £113m compared to the same level as in the fourth quarter 2018.
There was some optimism in terms of job creation, with the annual rate of employment growth increasing from 1.1 per cent to 1.3 per cent.
“The health of UK SMEs is pivotal to the success of our wider economy, and the picture painted by the results this quarter was mixed,” Gavin Opperman, group customer banking director at CYBG, said.
“On the surface things may look a little gloomy, but cause for optimism can be found.
“The labour market has remained resilient, with SMEs continuing to hire, and wages continuing to grow, despite the tougher conditions.”
Commenting on the data, Chirag Shah, chief executive of Nucleus Commercial Finance, said the decline in confidence was unsurprising given the “Brexit limbo.”
“SMEs play a vital role in the strength of the UK economy and so it is important they continue to have access to support in these politically turbulent times,” Shah said.
“We want to reassure businesses that alternative lending solutions can help them achieve their ambitions and remain competitive in a challenging environment.”