Optimism surge recorded among small and medium enterprises, CBI survey finds

The level of optimism among the UK’s small and medium enterprises (SMEs) has started to climb back up following a rather downward-looking quarter, data from the CBI’s Quarterly SME trends survey has been able to suggest.

The poll of 441 firms in this segment has found that the total new orders and new domestic orders rose up slightly in the three months to April, while in the same time optimism about demand for exports over the year ahead also rose for the second quarter, with SMEs expressing greater confidence than larger firms.

According to the survey, investment intentions strengthened, with replacement and efficiency among the primary drivers of investment, while hiring intentions remain firm.

Plans for capital spending on plant and machinery in the year ahead (+5%) strengthened somewhat (-10 in the previous quarter), whereas investment in buildings (-6%) is expected to fall further (-18).

Meanwhile, investment in product & process innovation is expected to rise at a steady pace (+9%), as is spending on training & retraining (+26%) The latter balance remains well above the survey long-run average (+13%).

Rain Newton-Smith, CBI Director for Economics, said:

“Higher spending on training is often a sign that skills shortages are biting again. This further underlines the need for business and government to work together in the coming months and make sure we get the design of the apprenticeship levy right, so it can deliver the quality skills training that firms need.

“While the depreciation of the Pound since mid-2015 will be welcomed by exporters, the Government could and should do more to help by establishing an exports commission that can look at the challenges and opportunities for exporters more closely.”

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