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UK SMEs remain optimistic despite possible EU exit

British SMEs are optimistic of increasing sales in the coming months, according to the recent SME Confidence Tracker from invoice finance experts Bibby Financial Services (BFS). However, the research also revealed that concern remains among SMEs over how an EU exit would shape their country’s economic climate. Looking ahead, what are the potential implications for UK SMEs?

Some expect to increase sales

In Q1 2016, BFS reported 48% of the UK SMEs surveyed are expecting to increase sales in Q2, which represents a rise on the 36% response rate from Q4 2015. Over the same period, the number of SMEs foreseeing a decrease in sales fell from 17% to 8%.

Amid the positivity, 26% of respondents expressed concern over the UK’s economic uncertainty and its possible hindrance to growth. When addressing the issue, BFS Global Chief Executive Officer David Postings clarified, stating: “SMEs still don’t believe in the UK growth story”, citing the EU Referendum as a major issue.

Experts divided over implications

Business-related debates are ongoing ahead of the EU Referendum on 23 June 2016, with a key issue being the lending implications for British businesses. The Guardian’s expert panel recently addressed the issue of business finance following a UK exit from the EU.

On the positive side of the debate, Daniel Gros who is Director of the Centre for European Policy Studies believes UK SMEs will be largely unaffected by a Brexit because they tend to depend on loans from domestic retail banks. However, Mr Gros does mention that businesses would miss out on funding from special EU finance schemes for SMEs.

Meanwhile, Sebastian Dullien, Senior Policy Fellow at the European Council on Foreign Relations is convinced a UK exit “would create huge uncertainties … which would translate into more restrictive financing conditions and less availability of funds for [SMEs].”

Dr Swati Dhingra Assistant Professor at the London School of Economics seems less concerned about EU funding, saying: “European banks have had a limited impact on the terms of bank lending to SMEs”. Instead, Dr Dhingra believes the greater concern is “[UK] banks shifting their lending away from SMEs and towards larger businesses.”

Given the current uncertainty, UK SMEs need to maintain a healthy cash flow for the months ahead. During this time, ethical Enforcement Agents like Dukes Bailiffs can help businesses avoid invoice delays by facilitating quick and effective collections.

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