UK Economic Recovery 'Not Filtering Down' to One in Four SMEs

The UK's economic recovery may not be filtering down to small and medium-sized firms as one in four companies have predicted zero growth in the next six months, according to data from Virgin Media Business seen by IBTimes UK.

The survey, which questioned more than 1,000 UK firms with two to 250 staff, found 23% of respondents said they think their companies will not growth in the next six months.

Virgin Media Business said the data suggested the economic recovery is not filtering down to smaller firms.

The research also revealed nearly a quarter of (24%) SMEs said the current economic situation was their single biggest barrier to growth.

"SMEs should be the fuel of our economy powered by simple, flexible technology, but we feel that industry and the government need to look at ways it can provide more support and direct assistance to this group which is UK plc's driving force," said Mike Smith, director of SMB at Virgin Media Business.

"Technology has an unrivalled power to help propel businesses forward but people need the skills to be able to use it.

"With simpler products, better skills and backing from the top, the UK's businesses will grow faster and that can only be good for the whole economy."

The survey also found just over half of company founders (53%) said getting the right business advice was one of their greatest challenges when setting up their business, just behind understanding taxes and VAT.

Fewer than one in ten (8%) said they turned to government services when they actually had business problems.

However, the research also showed businesses were failing to appreciate the growth potential in modern digital technology.

The survey found only one in five SMEs (20%) said digital training was a key area for investment in the next five years.

The research coincides with Virgin Media Business launch of an "SMEcab" service to provide free taxi rides to entrepreneurs across some of the UK's major cities, including London and Manchester.

But the Federation of Small Businesses revealed confidence levels among small businesses hit record highs in September.

The business body's Small Business Index reached +41 points in the third quarter.

The organisation explained it was the first time the sentiment reached the level, with every sector recording a positive outlook for the upcoming three months.

The survey also found three-fifths of the small businesses surveyed (61%) expected to grow in the next 12 months and one in ten (11%) expected to grow rapidly.

"We're seeing record-breaking confidence from our members, which suggests small firms will continue to spearhead the UK's recovery," said John Allan, national chairman of the FSB.

"We want policymakers to lock in this optimism and continue to back the self-employed and small businesses.

"As we head in to party conference season, we'll be looking to all the political parties to spell out what they will do to encourage job creation, investment and reward entrepreneurs in the next parliament."