Small firms

SME business leaders are relatively confident about their own prospects in the year ahead but have concerns about the wider economy, according to a new poll.

A survey of 762 company directors conducted in December by the Institute of Directors (IoD) found that almost half were feeling "quite" or "very optimistic" about their own prospects. However, a similar number said they are feeling pessimistic when asked about the wider economy.

"It is welcome to see that directors are cautiously optimistic for their own businesses," said Stephen Martin, IoD director general. "We have seen progress in recent weeks in the Brexit talks, and overall the economy has beaten the more negative predictions for 2017. Our members will be looking ahead to 2018 determined to ensure their companies continue to thrive."

New research by the CBI also shows that UK firms had a good end of year in 2017. Private sector growth picked up in the quarter to December, according to the latest CBI Growth Indicator.

This composite measure - based on 642 respondents across the distribution, manufacturing and service sectors - showed the balance of firms reporting a rise in output at +19%, compared with +6% in the three months to November 2017.

However, the CBI report predicts that private sector growth will return to a slower pace (+4%) over the next three months.

Meanwhile, half of those surveyed by the IoD said domestic economic conditions are the most pressing issue for their business; around four in ten said uncertainty surrounding the UK's trading status with the EU and skills shortages are having a detrimental effect.

At the top of the New Year's wish-list for domestic reform is investment in physical and digital infrastructure, alongside reducing the regulatory burden for businesses.

"The concern in these figures is the prevailing low expectations for the performance of the economy as a whole," said the IoD's Stephen Martin. "The Government must now build on the resilience of business leaders. It can help to bolster confidence by hitting the ground running in January, pushing ahead with the priorities spelled out in its Industrial Strategy in areas like transport and skills.

"The next few months are a critical time for this Government and for businesses up and down this country. Getting the business environment right by investing in infrastructure and serious engagement with companies on the future trading relationship with the EU must remain top of the agenda."

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