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October 2016 economic statistics: All the figures SMEs need to know

8 min read

01 November 2016

Deputy Editor, Real Business

From Living Wage stats to national business numbers, our October 2016 economic statistics roundup has everything in place for enterprise leaders.

The Zurich SME Risk Index is part of our October 2016 economic statistics roundup, and shows that business risk is at its lowest level in four years, despite 53 per cent of Britain’s small businesses voicing concerns over the current economic climate.

This was according to survey results from over 1,000 SME owners and decision makers – with only seven per cent remotely considering closing down shop.

General reduction in business risk, the index found, had resulted in a positive knock-on effect on business operations. Only 15 per cent of SMEs have had to reduce prices in the last financial quarter, while nine per cent made staff cuts.

So there appears to be light at the end of the tunnel for small businesses, Anne Griffiths, head of SME proposition at Zurich said. “Businesses are growing at twice the rate of those shrinking in the UK. The SME community has long been the economic heartbeat of Britain, and while fixing the economy remains the highest priority, the wider picture is one of success, prosperity, and most importantly, optimism.”

It comes hand-in-hand with news that the number of private sector businesses in the UK has hit a record 5.5m. SMEs account for at least 99 per cent of businesses in every industry sector, business and energy secretary Greg Clark hailed. The total number of companies in London has also reached one million for the first time and the number of businesses employing people across the country has risen for the third year running.

Have a look at our SME statistics round-up hub – with month-by-month accounts

As a whole, there was a 23 per cent increase in businesses at the start of 2016 compared to 2010, with the government’s Department for Business, Energy and International Strategy revealing it had given entrepreneurs £250m from its Start Up Loans scheme. And with the need for finance often correlating with a firm seeking to expand its reaches, exporting figures also had to be put up for display and feature in our October 2016 economic statistics feature.

The results aren’t as good, with the Centre for Economics and Business Research, alongside World First, suggesting that if SMEs matched the levels of exports made by larger counterparts, UK exports would rise by £141.3bn. It would be an increase of 25 per cent, which would certainly go some way to helping alleviate our economic headaches. It was even the subject of World First’s Think Global event, where the over-arching message was: there hasn’t been an environment this favourable for exporters in decades.

The Brexit vote led to a sharp decline in the value of the pound, at one stage falling to a 31-year low. Let’s also not forget the strange contradiction that is the UK’s M&A activity. In Europe, M&A deal value has us back to 2013 levels – firms have postponed deals, cautious of exchange rates. But despite the sluggish first half of the year, the aggregate value of those deals resulted in our highest Q3 result since 2008. This may largely be due to Softbank’s bid for ARM Holdings in July.

Read on to find out about AIM delistings and financial distress.

Image: Shutterstock

As always, there’s an element of bad news – what would our October 2016 economic statistics roundup be without it? Data from Begbies Traynor revealed nearly 100,000 businesses forced to implement the National Living Wage in April 2016 are now in a state of financial distress. And the situation looks set to further deteriorate as the government appears intent on increasing the National Living Wage to £9 an hour by 2020.

“My concern is that many of these struggling businesses may now be forced to take more drastic measures to manage a growing cost base, such as further cuts to staff numbers, reducing bonuses or even passing on the increased costs to the end consumer,” said Julie Palmer, partner at Begbies Traynor.

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Furthermore, the number of companies de-listing from AIM has increased 20 per cent to 107 in the last year, UHY Hacker Young claimed. It said financial stress and insolvency was the leading cause – accounting for the removal of 30 companies from the junior stock market so far in 2016. The impact of low oil prices caused particular difficulties, UHY suggested, further saying Brexit uncertainty has made for a tougher fundraising environment.

And where does the UK stand in terms of the workforce this month? It’s been over two years since the right to request flexible working was extended to all employees with six months’ service. My Family Care and Hydrogen revealed that of its 1,897 participating staff and bosses, only 34 per cent were encouraged to work flexibly. There was also a big disconnect between the hours that people work and want to work. Only 37 per cent of people were found to have flexible start and finish times. Take into account the fact that greater flexibility could add an extra £11.5bn to the economy, then you get the gist of the problem

It certainly doesn’t bode well when latched onto news by AXA – the last offering from our October 2016 economic statistics feature. It stated that 81 per cent Brits who experienced difficulties with their mental health also suffered in terms of physical health. The government’s department of health suggested mental ill health is the largest cause of disability in the UK, contributing up to 22.8 per cent of the total burden, compared to 15.9 per cent for cancer and 16.2 per cent for cardiovascular disease. Its wider economic costs, it said, have been estimated to reach £105.2bn each year.

Mark Winwood, director of psychological services for AXA PPP healthcare, said: “When employees are experiencing financial problems or have a mental health or physical health issue, the link between these areas of wellbeing may lead to their negative experience being exacerbated. It’s a potentially toxic mix that calls for careful handling. Being afraid to open up about personal problems – whether they’re work related or not – can seriously affect employee wellbeing. Mood, productivity and engagement can all be disrupted. To help to address this, it’s important for the organisation’s leadership to promote a positive, supportive workplace culture where employees are encouraged to speak up and seek support for the challenges that are proving difficult to overcome.”

If you enjoyed our October 2016 economic statistics roundup, have a look at our September instalment.