Gloomy businesses turn away from credit

BRITAIN’S small businesses are forecasting lower growth this year and have backed away from readily available credit amid economic uncertainty made worse by Brexit.

Their confidence is deteriorating, a survey by the British Business Bank showed, despite an improvement in credit conditions, with asset finance and peer-to-peer lending reaching £16.8 billion and £1.3 billion respectively in 2016.

Only 37% of small and medium-sized enterprises (SME) expected to grow in the coming year, down from 56% in 2015, but 71% would rather experience slower growth than have their expansion fuelled by borrowed cash, the survey found.

The report said the decline in confidence among small businesses was due to “a combination of factors,” including economic jitters, “with the EU referendum result last year introducing a further element of uncertainty to SMEs’ outlook”.

Businesses are also facing emerging inflationary pressures following the Brexit-induced collapse of the pound, making it harder for them to plan and make secure investment decisions, it said.

British Business Bank chief executive Keith Morgan said: “Our report shows that smaller businesses still face challenges on their growth journey.

“Despite the improvement in finance markets, many seem to be holding back on their ambition, not simply because they can’t access finance but because they’re cautious about seeking it in the first place.”