- Overall levels of optimism remained steady at just over 80 per cent
- Nine per cent drop in number of SMEs optimistic about growth this year compared to 2013
- 40 per cent drop in SMEs planning to take on new employees in 2014
- Potential interest rate rises are a concern - nearly a third citing this as a reason for reduced optimism
- The UK’s most optimistic business is likely to be Scottish, run by a female under 35 and in the personal services (eg cleaning, hairdressing, dog walking) sector
Optimism by sector
Overall optimism stayed steady at 82 per cent (81 per cent in 2013), but was slightly lower among retail and distribution businesses (79 per cent) and highest among businesses offering personal services (89 per cent). Retail businesses also showed a big drop in growth expectations – while 71 per cent said they were optimistic of growth last year, that’s now just 58 per cent. Only construction/industrial companies were looking more confident about growth this year, possibly a reflection of the fastest growth in house building that the UK’s seen since 2003.
Sector | Overall optimism about state of business (per cent) |
Retail and distribution | 79 |
Building trades and industrial sector | 82 |
Professional services (eg accountancy, IT, marketing) | 83 |
Personal services (eg cleaning, hairdressing, dog walking) | 89 |
Small businesses optimism about growth by sector (per cent) | |||
2012 | 2013 | 2014 | |
Retail and distribution | 35 | 71 | 58 |
Building trades and industrial sector | 34 | 48 | 57 |
Professional services (eg accountancy, IT, marketing) | 34 | 67 | 59 |
Personal services (eg cleaning, hairdressing, dog walking) | 41 | 67 | 63 |
TOTAL (ALL SECTORS) | 35 | 63 | 58 |
SMEs’ appetite for recruitment has also suffered this year with a 40 per cent drop in businesses planning to hire. Small retail businesses have taken the biggest hit – only 15 per cent are planning to take on staff this year, compared to almost 50 per cent this time last year.
Small businesses planning to hire new employees this year by sector (per cent) | ||
2013 | 2014 | |
Retail and distribution | 47 | 15 |
Building trades and industrial sector | 32 | 26 |
Professional services (eg accountancy, IT, marketing) | 34 | 27 |
Personal services (eg cleaning, hairdressing, dog-walking) | 43 | 25 |
TOTAL (ALL SECTORS) | 38 | 23 |
Optimism by region As last year, Scottish businesses emerged as the most optimistic overall, as well as showing greater enthusiasm for hiring and growth.
England (per cent) | Scotland (per cent) | Wales (per cent) | |
Overall optimism about state of business | 82 | 91 | 79 |
Optimistic about growth | 58 | 63 | 47 |
Planning on taking on new staff in the coming year | 22 | 37 | 18 |
Dents in SME optimism in 2014
When asked about things that affected their overall optimism, a third of SMEs said the prospect of rising interest rates made them less optimistic. It was a particular concern for construction/industrial businesses with 41 per cent citing it as a reason for diminished confidence.
Meanwhile, the economic situation in the Eurozone seems to be less of an issue than a year ago when over a third of SMEs considered this a dampener to their optimism, a figure that has dropped to just under a quarter this year.
Source: Markit/CIPS UK Construction PMI