Tuesday 26 May 2020 2:33 pm

UK SMEs see light at the end of the tunnel despite short-term gloom

The UK’s SMEs are set to see their revenue fall a combined 28 per cent in the second quarter of the year due to the coronavirus pandemic, with almost three-quarters of businesses expecting the disease to have a significant impact for the next three months.

According to new data from Barclaycard’s quarterly SME barometer, sentiment at such firms has dropped 31 points this quarter, to 79 out of a possible 200.

Any score below 100 indicates negative sentiment. 

In addition, 82 per cent of all SMEs said that the pandemic and subsequent lockdowns had had a negative impact on their business, with 73 per cent saying they expected that to continue.

However, the data showed that despite the short-term gloom, the majority of businesses remain optimistic about the future.

Only 19 per cent of firms think that the pandemic will still have a negative impact in a year’s time, a figure that drops to eight per cent a year later.

In addition, in the short term, Barclaycard found that the number of SMEs taking payments had increased 24 per cent since reaching its nadir in early April.

Backing up their claims of confidence, nearly two-thirds – 64 per cent – of such businesses are planning to invest in their own operations over the next year.

Konrad Kelling, head of small business acquiring at Barclaycard, said: “It’s encouraging to see small and medium-sized businesses starting to come online again as we emerge from lockdown.  

“While we don’t expect an overnight recovery, the resilience and perseverance of small businesses gives us optimism as we look towards the next 12 to 24 months”.

Financial services firms buck the trend

Although the outlook varied by sector, one industry in particular stood out against the rest of the businesses: financial services.

In data for CityAM, Barclaycard revealed that such firms were expecting revenue to fall by 13 per cent in the second quarter, more than half the average.

Sentiment for financial services businesses was also 12 points higher than the rest of surveyed companies, at 91 points.

Perhaps most strikingly, although 64 per cent of all businesses said the virus had had a significant negative impact, this figure drops to 38 per cent for financial services SMEs.

Further, 50 per cent of such firms said that their cash reserves and liquidity were strong, by far the highest percentage out of any sector.

To compile the data, YouGov polled 576 members of staff at SMEs on Barclaycard’s behalf between 1-21 April.