Clifton Asset Management

BUSINESS OWNERS’ RETIREMENT HOPES CONTINUE TO FADE

Clifton Asset Management survey shows that retirement is now further away for the vast majority – although a quarter of SMEs believe the recession may have bottomed out

Retirement has become more elusive than ever for small business owners as the UK struggles to emerge from recession, according to new research.

Meanwhile SMEs remain overwhelmingly dismissive of Government attempts to stimulate bank lending to businesses through the Enterprise Finance Guarantee.

The latest quarterly survey of more than 1,000 business owners, carried out by Clifton Asset Management (CAM), also reveals widespread regional variations in the way UK companies view the long-awaited economic recovery.

With the summer holiday season in full swing the survey from CAM, which provides specialist financial and strategic advice to SMEs, shows that 83 per cent of business owners feel their retirement is further away now than it was a year ago. This compares with 79 per cent in the previous quarter‘s survey, and 59 per cent 12 months ago.

“Despite recent speculation about ‘green shoots‘, we are still deep in the worst recession in living memory and it is no surprise to see this fact reflected in the way small business owners see their future prospects,” said Neil Greenaway, managing director of Clifton Asset Management.

More than a third – 34 per cent - of companies in the survey said they had been forced to shed jobs over the past six months, with 10 per cent saying they may be forced to reduce their payroll even further. A small number – 3 per cent – say they have not yet had to shed jobs but anticipate having to do so in the coming months.

“These figures give some cause for optimism that the worst may be over but they should be treated with caution,” said Mr Greenaway. “For example, the number of those who say they have not had to reduce staff numbers in order to survive, and furthermore do not anticipate having to do so, continues to fall each quarter, and is below 50 per cent in our latest survey.

“Likewise only a quarter of small businesses who took part in our survey are now operating a company pension scheme, and of those, a little over half are continuing to make regular contributions. This speaks volumes about our current financial plight and the degree of apprehension most business owners have about the future.”

Meanwhile according to the CAM research, there is still very little enthusiasm for the Government‘s flagship scheme to support small businesses through the downturn, the Enterprise Finance Guarantee.

While the number of business owners who are aware of the EFG has risen to 68 per cent, a massive 93 per cent see no benefit in making an application under the scheme. Across the UK just 2 per cent of SMEs say they have successfully managed to access funding through the scheme.

Neil Greenaway commented: “We learned recently from the Government‘s own figures, that the amount of money in the form of loan guarantees which got through to businesses over the financial year just gone, had actually fallen on the previous year and was well short of the £1.3 billion budget which had been set.

“Once again our survey backs up the huge store of anecdotal evidence we have received from business owners who again and again report that it remains near-impossible for them to access finance from the banks. Likewise, only a quarter of those questioned in our survey say that that the Government fully appreciates the crucial role of owner-managed businesses in the UK economy – although this figure stood a just 4 per cent a year ago.”

The CAM survey also reveals marked differences in attitudes among business owners in the various regions in England and Wales. While London (73 per cent) and the South East (58 per cent) remain the most optimistic in terms of their belief in their region being better placed than the UK as a whole to withstand the recession, businesses in the capital are also among the pessimistic in terms of their perception of how long the recession has left to run.

Only 16 per cent of survey respondents in London said their business had given them cause to believe that the recession had bottomed out, the lowest figure for any region except Wales (12 per cent).

Meanwhile businesses in the West Midlands continue to be the most pessimistic in terms of the relative strengths of their region‘s economy, at the same time being among the most optimistic when it comes to seeing an end to the recession. Only 16 per cent of West Midlands firms believe their region is better placed than others to recover from the downturn, but 27 per cent say they believe the worst of the recession may now be over – a figure only bettered by the South East (30 per cent).

“It is interesting to see that while traditional manufacturing areas such as the West Midlands, Wales and the North East remain the most pessimistic about their region‘s prospects, it is Londoners who more than anyone else see few signs that the UK is emerging from the economic doldrums,” commented Neil Greenaway.

“Since we launched our survey there has been a steady increase in the number of business owners who are telling us that their retirement has moved further away.

“While it is encouraging that nationally, a quarter of companies believe the worst of the recession may be over, our research continues to highlight the desperate situation for many in regard to pension schemes, and a complete lack of confidence in the Government‘s attempts to support their sector. Both of these factors need to be properly addressed before the UK‘s SMEs can feel fully confident about the future.”

ENDS 18th August 2009

For further information please contact Louie Hadley, Sturgess Van Damme on 01275 349011 or email louie@sturgessvandamme.co.uk