Although the European market and wider global financial picture is still unclear as the fallout from the banking crisis continues to reverberate, in the UK there is some evidence of an improvement.
Perhaps the most important pointers for any SME are the reports and polls which indicate a general air of optimism amongst consumers, with early figures showing an increase in spending.
So, are the green shoots of business recovery really going to flower in 2014 and if so what business advice should SMEs be heeding?
This year’s budget from Chancellor George Osborne didn’t make any ground-breaking moves in terms of major effects on SMEs, but there were some points that should have had a positive input for many.
The news of a fall in Corporation tax from 21% to 20%, with the small company and main rate being merged, may not initially seem like a huge change. But many business leaders felt it was a move in the right direction and a good signal of intent. Whether or not there will be any more similar changes next year, as we get closer to a general election, is hard to predict.
The budget announcement that small businesses would get a £2,000 allowance before having to pay employer National Insurance contributions was described by Mr Osborne as “taking tax off jobs” and is definitely a measure aimed at benefiting small firms that will have a positive impact.
The state of the lending market is something that is of great importance to SMEs. The reluctance of banks to make funds available over the past few years have caused plenty of problems for businesses in many ways, but again the prospects are looking good for a change of policy.
Changes to the Bank of England Monetary Policy Committee’s remit have given it a broader scope for action whilst aiming at maintaining an inflation target of 2%, and new BOE Governor Mark Carney has a record of helping businesses to thrive in difficult conditions.
Under his leadership the Bank has introduced a new strategy of forward guidance, which is aimed at taking away some of the uncertainty surrounding interest rate levels and allowing SMEs and other companies to plan further ahead.
The announcement that UK interest rates will remain at their record low until unemployment falls below 7% is the first example of this approach and is already thought to be having an impact on lending.