275k SMEs at risk of failure due to economic volatility

275,000 UK-based small- and medium-sized enterprises (SMEs) are at risk of winding up due to economic volatility.

According to new research from Nucleus Commercial Finance, UK SMEs have seen their costs rise by an average of 15 per cent over the past 12 months. In response, 35 per cent of SMEs are increasing the cost of their products and services.

Smaller businesses with between 10 and 249 employees are worst affected, with their costs rising by an average of 18 per cent. 83 per cent of these smaller businesses believe that their costs will rise again in the year ahead.

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Nucleus’ research found that almost a quarter (23 per cent) of SMEs are delaying planned investment in technology and infrastructure to cope with rising costs. Meanwhile 16 per cent are shelving their growth ambitions.

“While the Chancellor’s Budget and recommitment to the creation of 12 new entrepreneurial zones signalled a clear route to kickstart the economy and revitalise investment in the UK; SMEs and their employees are still at high risk this year,” said Chirag Shah, chief executive and founder of Nucleus Commercial Finance.

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“Going forward, the government needs to give businesses the confidence that their commitment and drive for growth will be properly supported, combined with substantive incentives for them to take a financial leap.

“So, while the Chancellor’s inclusion of a new tax credit for SMEs who spend at least 40 per cent of their expenditure on research and development may be a welcomed bonus; business owners will still be laser-focussed on exactly how the energy cost freezes will prevent them from having to turn the lights out forever.”

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