Uncertain outlook

Surveys give contrasting verdict on SME trading

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SME health is vital to the UK economy

Owners of small and medium-sized businesses have had a strong first quarter of trading in 2024, according to a survey by NatWest that contradicts a poll in Scotland saying trading conditions had been poor.

The survey by NatWest, trading as RBS north of the border, says companies offering services have done particularly well and that March marks the fifth successive rise in new business.

Overall, the rate of output growth by small and medium-sized businesses in the first quarter of 2024 was the strongest since the same quarter last year.

The survey is based on the responses of 850 companies based in Britain as part of a purchasing managers’ index researched by S&P Global.

SMEs reported another sharp rise in their average cost burdens, especially those in the service economy, largely due to rising salary payments and transportation costs.

Sebastian Burnside, NatWest chief economist, said: “Businesses have shown great resilience in the face of challenging market conditions as rocketing inflation and then rising interest rates made their mark. So, it’s good to see that firms are now reporting much more muted inflationary pressures at the same time as five months of growth in a row.”

The positive picture painted by the survey does not square with a gloomier report from the law firm Addleshaw Goddard whose Scottish business monitor suggested that business fortunes north of the Border had taken a distinct turn for the worse in the first quarter of the year.

The monitor, which is produced in partnership with the University of Strathclyde’s Fraser of Allander Institute, revealed that in the first three months of the year all its regular measures of activity were in negative territory for the first time since the end of 2022.

Cost pressures continued to bite despite inflation easing, with 83% of firms in Scotland seeing their costs increase over the quarter.

However, it did say that with the right level of government support SMEs can benefit from an expected pick up in activity.

There was also a warning last month from the Scottish Chambers of Commerce that the “persistently high cost of doing business” was hammering cashflow and profitability for Scotland’s small and medium-sized enterprises (SMEs).



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