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SMEs planning for growth despite double-dip

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Optimism among small to mid-cap companies in the UK has risen sharply, the latest QCA/BDO Small & Mid-Cap Semtiment Index revealed.

Businesses are planning for growth and are increasingly optimistic about economic prospects, despite the UK re-entering recession.

Optimism in the UK economy has risen sharply from 40.9 in January to 47.3 in April this year, with an even larger increase from 36.6 in January to 46.6 in April. Confidence in companies’ individual prospects for the next 12 months has also increased, from 62.4 in January to 66.1 in March, suggesting that small and mid-caps feel better prepared to face the challenges ahead.

Businesses are definitely planning for growth, as the numbers show. 40 per cent of small and mid-cap companies expect to raise finance in the next 12 months and 38 per cent of companies would consider turning to public equity if the need for finance arose in the coming year.

“Small and mid-cap quoted companies now seem better able to anticipate the economic climate, which is reflected in the optimism scores of our research,” commented Scott Knight of BDO LLP. “Our clients tell us that they are not seeing the trends identified in the ONS growth statistics and are planning to invest in growth.”

Confidence extends to the belief in the businesses’ own current corporate governance standards, with 92 per cent of small and mid-cap companies calling for a corporate governance code for standard listed, AIM and PLUS-quoted companies that is appropriate to the size and complexity of the company and where it was mandatory to explain or comply.

Tim Ward, Chief Executive of the Quoted Companies Alliance said, “The engines of growth are telling us that small and mid-caps must focus on delivering revenue and profits and keeping shareholders informed, while facing further regulation. However, cash is the fuel to finance this growth – and we need to see more attention in this area.”

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