Keep calm and carry on: Small firms stay positive despite falling confidence in the economy

The confidence of small and medium sized businesses in the economy took a sharp hit following the General Election, but they're remaining calm and still projecting revenue, jobs and profit growth, new research shows.

The study by Capital Economics, commissioned by Amazon UK and Enterprise Nation, saw its index for the second quarter of 2017 fall to -11, down from +3 in Q1 2017 and lower than in the final quarter of 2016.

Of the more than 1,000 SMEs surveyed shortly after the result of the General Election was declared, 21% predicted that in the next 12 months the overall business conditions for their company will be "significantly" or "somewhat" improved.

In contrast, 36% said conditions will have deteriorated, double the amount who said the same during the first three months of the year.

But despite the tougher business climate, entrepreneurs remain resolute. Respondents expected revenue growth to accelerate from 0.8% over the past 12 months to 1.7% in the year ahead.

Bosses also plan to increase employee numbers by 0.7% and profits by 0.4%.

"SMEs clearly see the overall economic climate out there as cause for concern, but there's also plenty of light amongst the shade,” said Doug Gurr, UK country manager at Amazon.

"SMEs are once again demonstrating their importance to the UK economy by keeping calm and carrying on, anticipating revenue, hiring and profit growth as well as ramping up capital investment."

Business owners' attitude to exporting was generally positive, with SMEs expecting a 1.0% growth in overseas revenues.

However, of those doing business with other EU countries, more expected export revenues from the trade block to decrease than increase in the year ahead, in contrast to exporters to all other parts of the world where more predict a rise.

Emma Jones, founder of Enterprise Nation, added: "The UK currently ranks just seventh in the EU for exporting, and it's clear from this quarter's SME Growth Tracker that there is still some nervousness from SMEs in the country about selling globally, despite the huge opportunity it brings.

"With the uncertainty of Brexit and the resulting uncertain UK economic landscape, it's really important to spread your risk and broaden your customer base.

"Exporting more and embracing the digital economy delivers this, which is why our final SME trade missions for this year focus on the US, Singapore and Dubai."

Regionally, SMEs in London were the most pessimistic about business conditions for their company with a score of -21, well below the national average.

SMEs in the capital also expected the lowest job growth (0.3%), with East Midlands-based businesses predicting the lowest revenue and profit growth.

Firms in Yorkshire and the Humber expected the highest increase in revenue and were are also most optimistic about business conditions for their company.