Employment prospects across the UK have received a significant boost after it emerged that almost a third of Britain’s Small and Medium Sized Enterprises (SMEs) intend to recruit new staff in 2014. According to a recent research by Clydesdale and Yorkshire Banks, 32% of SMEs intend to recruit new employees, with those who plan to create new jobs saying that they expect to grow staff numbers by 9%. The research found that on average, Britain’s 4.9 million SMEs expect to recruit 2.9% more staff.
The recruitment intentions revealed by the research were supported by significant investment plans. Nearly a quarter of SMEs questioned said they would spend additional money on new staff over the next year. The survey shows that small businesses (10–49 employees)are the most likely to grow staff numbers, with 63% of firms in this category saying they plan to create jobs compared with 36 % of medium-sized businesses (50-249 employees).
Job prospects are especially bright in the North East where 64% of SMEs intend to hire more staff. Recruitment is also set to be strong in London, where 46% of SMEs signaled plans to increase staff numbers, with the Midlands (44%) and Scotland (43%) following closely behind.
UK Businesses See Their Confidence Growing
Some sectors seem to benefit more than others from the job boom, with more than half of professional services and accounting firms and more than half of manufacturing SMEs polled planning to create jobs. Recruitment intention was lowest among wholesale and retail traders, with just 9% of those questioned planning to hire new staff.
The research indicates growing confidence among the UK business community. More than half of SMEs questioned said that the UK economy offers good long-term prospects for business growth, and 97 % of respondents plan to invest in growing their business over the next year.
Scott McKerracher, regional director for business and private banking with Clydesdale Bank East Scotland, said: “As the UK economic outlook continues to improve, we are starting to see a positive impact on recruitment plans. Increasing staff numbers can help businesses to boost productivity and competitiveness, and allow expansion into new markets as capacity grows. Creating new jobs is also good for the economy as a whole”.
SME Growth is not Without Challenges
While the figures of the research suggest that many businesses are becoming more confident about investing in their future, it is important to acknowledge the key challenges to growth. Access to funding is one of those.
Xavier Rolet, London Stock Exchange Group’s CEO says that “Without doubt, many SMEs find accessing long-term, supportive financing difficult. More than half of Britain’s SMEs resort to credit cards to fund their business. The same percentage use bank debt to finance their growth. Just 3% of entrepreneurs in the UK make use of equity finance. The US picture is the polar opposite, with only 18% using bank debt to fund their development”.
On the whole, SMEs are the lifeblood of the UK economy, as it is almost exclusively these companies that have generated new jobs in the UK since the financial crisis. Despite SMEs’ growth, more needs to be done to help these companies keep on nurturing the British economy. One of the main hardships for SMEs is accessing long-term supportive financing. The UK needs a more diversified funding environment for its entrepreneurs and ambitious, fast-growing entrepreneurs.