“The upcoming election and Brexit negotiations we’re preparing to navigate will accelerate the UK’s transition into a new type of economy, where flexibility is key and agile businesses will flourish,” says Steve Jude, CEO of UK flexible workspace operator, Citibase.
The latest Citibase Business Confidence Index takes the pulse of over 1,100 SMEs across the UK. The timing of this latest Index is particularly revealing, as it lands immediately after the triggering of Article 50 and ahead of the UK’s snap General Election.
Overall, the findings suggest that the government has the backing of SMEs on Brexit, as more respondents said they were confident the government would negotiate a good deal with the EU for UK businesses than not (44% vs 32%).
Over the past year there have been some huge political changes around the UK, with the Brexit vote leading the way followed by the triggering of Article 50 and now the surprise call for a snap General Election.
SMEs are the lifeblood of the UK economy – there are 5.5 million of them – and these businesses are vital to the UK economy. Citibase, one of the UK’s largest operators of fully serviced business centres, commissioned the Citibase Business Confidence Index to measure their opinions on a variety of factors during a fascinating political landscape.
Now in its second quarter, this confidence barometer of over 1,100 UK small businesses helps to gauge real opinions on the impact of ongoing political events on important factors such as revenue, morale, confidence and expectations for the future. The Citibase Business Confidence Index Q2 results were encouragingly positive.
Brexit to “boost fortunes”
As well as giving the thumbs up to a strong government negotiation mandate on Brexit, over three quarters said that exiting the EU will do no harm to the bottom line and may even boost their fortunes. Two thirds of respondents also said that triggering Article 50 would have either a positive effect or no impact on business confidence.
By comparing results with the first quarter, it’s clear that businesses are coming round to the reality of Brexit and are confident that a strong government will be able to negotiate a good deal.
The shifting tectonics show that there was a 5% rise in the number of firms who thought Brexit had a positive influence on revenues since Q1’s results.
Steve Jude, CEO, Citibase commented: “The results of our latest Citibase Confidence Index show UK SMEs have faith that the government will negotiate a good deal for businesses following an interesting call from Theresa May to hold a snap general election on 8 June.
“SMEs are the heartbeat of UK business and now more than ever these businesses will be crucial to our economy – it’s great that they have displayed such tremendous positivity. When the dust settles, small businesses, who are quick to react, will understand that looking beyond the election the government with a strong mandate will be able to negotiate a good deal on Brexit.
“This is demonstrated by a clear belief in the government, resilient business revenues and a renewed confidence in their potential for expansion.”
Sharp increase in flexible workspace demand
In this survey, the percentage of SMEs preferring a short term office contract of three years or less also increased from 59% in the previous quarter, to 69%, showing a notable increase in demand for flexibility by nimble small businesses.
Steve Jude commented: “This is a reflection of the growing trend for short term contracts around the country. As small businesses come round to the benefits Citibase’s flexible workspace offers them, demand continues to grow. We’ve opened several new centres over the past year to match this, and I see no signs of this trend slowing.”
Jude continued: “SMEs crave flexibility and affordability during times of change, and it is unlikely a business would sign up for the long term. Citibase helps these businesses manage risk and costs, allowing them to expand and remain agile, productive and profitable.”
The greatest concern for SMEs during Brexit was the value of sterling falling (34%), while their view was that the biggest priority for the government’s Brexit negotiations should be negotiating strong trade deals (30%). Europe was by far the most popular choice as the top market for prioritising a trade deal (56%), followed by North America (15%).
Jude said: “For some time now, I have been saying the world of work has changed forever, and the upcoming election and Brexit negotiations we’re preparing to navigate will accelerate the UK’s transition into a new type of economy, where flexibility is key and agile businesses will flourish.
“Welcome to the new economy!”
Appendix – key takeaways
- SMEs trust the current government to obtain a good deal for UK businesses in their negotiations with the EU, (44% confident, 32% not confident)
- Three quarters of SMEs are in good health following the Brexit vote, with 75% saying it had either a positive effect or no impact on their revenue
- Two thirds of businesses’ say their confidence was unaffected by the Brexit vote (65% said it had either a positive effect or no impact)
- The greatest concern for SMEs following the triggering of Article 50 was the value of sterling falling (34%), while their view was that the biggest priority for the government’s Brexit negotiations should be negotiating strong trade deals (30%). Europe was by far the most popular choice as the top market for prioritising a trade deal (56%), followed by North America (15%).
Comparative changes Q1 Citibase Business Confidence Index 2017 vs Q2 Citibase Business Confidence Index 2017
- Between Q1 and Q2 there was a 5% rise in the number of businesses who saw a positive impact on their revenue from the Brexit vote
- Between Q1 and Q2, the percentage of respondents who preferred an office contract of three years or less rose 10% (from 59% to 69%)
- When asked how respondents thought Donald Trump’s presidency would affect their business in Q1, 18% believed it would be negatively. When asked in Q2 how the presidency has affected them, only 13% said it had been negative
Key regional statistics
- Respondents from The North East wanted the shortest contract lengths post Brexit, with 81% preferring three years or less. Yorkshire expressed a desire for the longest post Brexit contract lengths, with only 53% of respondents desiring three or less years
- Nearly twice as many London respondents are confident in the government’s Brexit negotiations than not confident (50% confident vs 26% not confident)
- The percentage of Scottish respondents who saw a positive effect on their revenue from the Brexit vote nearly quadrupled between Q1 and Q2 (6% to 23%)
- Scotland, joint with the North West, had the lowest priority for controlling immigration as a negotiation topic of any part of the UK (17%). Yorkshire put controlling immigration as their number one negotiation priority (27%); with the North East choosing it as their second priority but their percentage was the highest of all the UK at 32%
Snap General Election
- The SMEs surveyed in the Business Confidence Index demonstrated their belief in the government’s negotiations with 44% stating that they were confident in a good result for UK businesses vs 32% who were not.
About the Citibase Business Confidence Index
The Citibase Business Confidence Index is a quarterly survey of decision makers working at UK SMEs of up to 250 employees. It was started in January 2017 and the Q2 survey was conducted at the end of March 2017. Each quarter results include over 1,100 respondents from across the UK and a wide variety of business sectors working at a senior decision maker level or higher.
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