A recent report by The Entrepreneurs Network and Sumer reveals a sobering reality for UK businesses. Nearly 44% of UK SMEs faced potential closure in 2024.
The comprehensive survey encapsulates the struggles of the economic landscape, shedding light on the challenges and optimism prevailing within the sector.
Economic Challenges Facing UK SMEs
The recent United Growth Report, surveying 610 entrepreneurs across twelve UK regions, underscores the formidable economic challenges confronting UK SMEs in 2024. Nearly half of the businesses surveyed, approximately 44%, teetered on the brink of closure this year. The statistic illuminates the precarious state of the UK’s mid-market sector.
Financial Support and Tax Burdens
Notably, 50% of respondents in the study indicated challenges in accessing financial support, highlighting a critical barrier to business sustainability. A significant 65% of business leaders cited high taxes as a primary concern. According to the study, high taxes were the largest single obstacle to business growth at 14%, closely followed by input costs at 13%.
Other Business Challenges
The United Growth Report also identified several other challenges UK businesses face. Difficulties accessing finance (11%), hiring challenges (9%), government bureaucracy (8%), premises costs (7%), and regulatory burdens (7%) are all notable points of concern.
Despite these challenges, optimism persists among business founders. A notable 60% of entrepreneurs expect revenue growth, with 57% predicting an increase in consumer demand. Additionally, 45% anticipate an increase in staff numbers, and 49% have ambitions geared towards growth rather than mere stability.
Regional Economic Disparities
A strong regional sentiment permeates the findings, with 89% of business leaders confident that companies can reach their full potential without being situated in London. However, economic inequality across UK regions remains a significant concern.
Many regions suffer from under-investment, skills shortages, and economic stagnation. Entrepreneurs overwhelmingly perceive Greater London as receiving preferential treatment, calling for government action to address regional disparities.
The United Growth Report proposes several policy recommendations to support UK SMEs. These include maintaining competitive business taxes, reforming Capital Gains Tax, and making Business Rates fairer.
Policy Recommendations for Business Growth
In addition to tax reforms, the report suggests investing in infrastructure and streamlining the planning process to support business development. Alternative financing methods for construction and liberalising development regulations to increase the supply of business premises are also recommended.
Further recommendations encompass expanding mayoral devolution, granting ‘London-style’ powers to metro mayors, and considering devolving more fiscal powers from Whitehall to the regions.
Government’s Role in Supporting SMEs
The report emphasises the essential role of government action in unlocking the potential of the private sector. Providing a supportive environment for entrepreneurs is crucial, as it leverages job creation and economic growth across the nation.
Eamonn Ives, Research Director at The Entrepreneurs Network, states, “If the new Government is to make good on its promise to restore meaningful growth to every corner of the nation, it cannot ignore the role the private sector plays in delivering jobs and opportunities.”
The Future Outlook
Despite the numerous obstacles highlighted, the future outlook for UK SMEs is not entirely bleak. Many entrepreneurs remain hopeful about the coming year, with expectations of revenue and staff growth.
The findings of the United Growth Report act as a pivotal call for policy reforms and government intervention to bolster UK SMEs.
As the UK navigates its economic challenges, addressing the needs of SMEs remains crucial for fostering a resilient and thriving business environment.
