Smaller companies show strong rise in business confidence

Nearly three quarters of small and mid-cap companies now expect to increase their workforce over the coming year, as their confidence in the UK economy has increased significantly over the quarter, according to research from BDO.

The quarterly Quoted Companies Alliance/BDO Small & Mid-Cap Sentiment Index shows a 5.9 point rise in the sector's optimism about the UK's prospects, up from 58.2 in July to 64.1 this quarter. As a result, 72% of companies now expect to increase their workforce over the next 12 months, compared with 43% a year ago.

In addition, companies' confidence in their own business prospects rose to 70.4, from 65.5 in July - the report's highest-ever reading. Respondents expect turnover to grow strongly, with the mean expected change for the year ahead rising to 14.8 from 12.5.

The survey shows that small and mid-cap companies would welcome changes to the tax regime in order to make growth sustainable. A third (34%) of companies supported additional employers' NIC reductions or rebates for businesses that take on new workers or export as the measure most likely to have a positive impact on their business. A similar proportion called for the abolition of numerous tax reliefs in exchange for a lower overall corporation tax rate.

The research also reveals that the ease of raising capital has improved only slightly over the last quarter, with 35% of small and mid-cap companies feeling that the City of London serves them either poorly or very poorly.

Scott Knight, BDO partner, said: 'Sentiment has skyrocketed and small and mid-cap companies now need the right conditions to grow - National Insurance Contribution reductions and rebates would facilitate that growth, both here and abroad. The opportunities are there for both those investors who are prepared to focus on longer term growth and the City.'

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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