Small and medium-sized enterprises (SMEs) are increasingly positive about their post-Covid future but need continued government support to make a full recovery.
This is according a new study by Paragon Bank, reported in Business Money, which found that 54% of UK SMEs have recently either met or exceeded pre-pandemic turnover levels.
More than 90% of the firms feel positive about their future prospects.
Recovery in progress
The study also found that 22% of SMEs have exceeded pre-Covid turnover levels, with 31% matching pre-pandemic figures.
Of those recovering, 31% predict they will reach pre-Covid levels ‘soon’ and only 16% said recovery was ‘uncertain’.
Positive sentiment was up from 86% in September to 92% at the end of May. One in four businesses (24%) said their business recovery would exceed pre-Covid levels, up 10% on September.
According to a House of Commons Library Briefing Paper, SMEs make up 99.9% of UK private sector businesses, providing 61% or employment and 52% of turnover.
Another study by the Association of Chartered Accountants and the Corporate Finance Network, reported in City AM, confirmed rising SME optimism.
Their latest data shows that 89% of owners are trading at or above what they expected in July, up from 60% in June.
Most expect to return to pre-pandemic levels of turnover and productivity within two years.
However, the report also says that SME ambitions are being held back by difficulties obtaining growth finance.
Two-thirds are struggling to access overdrafts from their banks and one third found it challenging to secure mortgages or financial leases.
According to chartered accountants’ association the ICAEW, government rescue packages have played a crucial role in helping SMEs survive and even thrive during the pandemic.
It reports OECD analysis that 55% of SMEs in the UK have been able to access and combine government support, compared to 33.6% in the OECD as a whole.
The report warns that many support mechanisms for SMEs and entrepreneurs have come in the form of debt which, if unwound too rapidly, could lead to a wave of bankruptcies.
SMEs have also been hit by the ‘pingdemic’, the BBC reports, with thousands of healthy workers forced to self-isolate and businesses to limit services or close.
Hospitality, such as pubs, where 43% of pub staff are aged 18 to 25, have been particularly hard hit, said Emma McClarkin, chief executive of the British Beer & Pub Association.
“Already pubs are closing or greatly reducing their opening hours due to staff shortages caused by app pings - despite staff testing negative on lateral flow tests,” she said.
From 16 August, double-jabbed individuals and under-18s will no longer be required to self-isolate if they have been in contact with someone with the virus.
However, the industry body is urging the government to work with them to find a “sensible solution”.
The issues come on top of reports that some SMEs are looking to “throw in the towel” on exporting due to soaring international shipping costs, as reported in IOE&IT Daily Update today.