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May 2015

Over 70% say they aren’t concerned about access to finance

Zurich’s SME Risk Index shows that SME confidence in the economy has risen significantly over the past two years. There has been a 23% drop in concern about the economic climate since April 2013, down from 79% to 56% last month.

As a result the Zurich Risk Index has now fallen to its lowest level since records began, down from 44.55 points in April 2013 to 38.52 points in April this year.

Moreover, the majority (61%) of the SME decision makers we surveyed online say they are not worried about market dynamics, for instance interest rate fluctuations. This has increased from just 46% expressing this level of concern in April 2013.

Increased confidence is accompanied by evidence that SMEs are making fewer tough decisions about hot topics such as business finance and employee pay. Only 10% of those surveyed have looked at obtaining financial investment or extending payment terms in the last quarter. 7 in 10 SMEs (72%) now say that they are not concerned about access to finance – the highest level of confidence since the Risk Index began.

The number of SMEs who say they have had to reduce staff wages is also at its lowest level. 80% of SME decision makers say they have not had to reduce wages in the last quarter, the most positive statistic we’ve seen on the subject since the survey began.

Despite this increasingly optimistic economic outlook, many of the same day to day worries remain high on the agenda for SMEs. Workforce challenges and compliance headaches refuse to go away – 36% and 40% of SMEs are worried about these issues respectively.

When asked to pick their top three regulation challenges, pension regulations are now the second biggest challenge SMEs face (24%), replacing health and safety (21%). Employment regulations remain the number one legislative concern SMEs face (27%).

Jason Eatock, Head of SME at Zurich, comments:
“It’s a delight to report that SME confidence in the economy is continuing to rise, with the result that the Zurich SME Risk Index is now at its lowest level since records began. The good news is that SMEs are making fewer tough decisions about their finances, and staff are benefitting from fewer cutbacks.

“However, while the situation is improving overall, there is a way to go before British SMEs can be considered to operate in an environment of low business risk. Over a third of the businesses we spoke to said that compliance remains a top bugbear, with pension regulations overtaking health and safety as a major concern.

“Business owners seeking to make the most of the better business environment shouldn’t overlook risk planning, to ensure they know where problems could arise for them.”

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