Business growth forecasts reach three year high

The Momentum UK Team 11 September 2013

UK businesses are more confident about future growth than they have been for the past three years, according to a new survey by Santander.

Santander’s annual business growth survey found that UK businesses are forecasting 134% growth on aggregate over the next five years. That’s up from 88% in 2012 and 104% in 2011.

This new confidence is reflected in the ONS GDP survey in July, which found that the economy grew by 0.6% in the second quarter. Santander’s report also found that around 1 in 8 businesses are looking to hire new staff as an immediate priority, and 14% are turning to acquisitions for growth - double the proportion of last year.

However, despite this new-found optimism, businesses still face significant challenges; half of those polled said that they are focussed on “survival” as an immediate priority. The tough trading environment was seen as the biggest obstacle to growth, cited by 46% of businesses surveyed. Access to capital came in at second, cited by 26%.

Smaller companies were the most optimistic: those with a turnover of £50,000-£100,000 predicted 607% growth over the next five years.

Marcelino Castrillo, head of SME at Santander Corporate and Commercial, said:

“Understandably, many businesses remain cautious given the current environment. However, our latest growth survey reveals the most optimistic five-year outlook for three years. It also found that since 2011 more SMEs are looking at growing both by acquisition as well as organic expansion, which we believe is positive news for the UK economy. Figures that indicate firms are increasing efforts to hire new staff are also to be welcomed.

“Given the increase in optimism, we encourage businesses to remain focused on business fundamentals and plan responsibly for future growth. For companies that have survived the past few years of economic volatility and are well positioned to seize future opportunities, basics such as effective cash flow management, first-rate customer service and long-term strategic planning remain crucial to realising their growth ambitions.”