Business Barometer

Hitachi’s benefits and drawbacks of Britain’s status in the EU

Business survey points to SMEs seeing chaos as a ladder.

Hitachi Capital Business Finance releases the Business Barometer every financial quarter, an assessment of SME confidence and their outlooks for the next twelve months. Christopher Marchant spoke to Gavin Wraith-Carter, managing director at Hitachi Capital Business Finance, about how SMEs have reacted to Brexit uncertainty and Hitachi’s own plans to provide for the SME sector in turbulent times.

“Those enterprises that were most likely to predict significant expansion in the months ahead were highly likely to identify tangible opportunities arising from Brexit (70%), whereas those predicting contraction (31%) or risk of closure (25%) were least likely to see any upside.”

Hitachi Capital Business Finance Business Barometer

As to whether Brexit is upsetting rates of SME lending, Wraith-Carter was surprised to find it largely unchanged: “Many asset finance businesses have been waiting to see whether SMEs put off purchases, or get more risk-averse with Brexit looming. Yet what we are finding is it is very much 'business means business' in the SME world.”

However, the Business Barometer also reports that SME confidence is at a five year low, with only 34% of the 1,177 SME decision makers interviewed by YouGov for the survey predicting growth. Wraith-Carter said: “The flip side of the research is that SMEs are very much getting on with things. They might be expecting lower growth or no growth, but actually it is still not hugely damaging them. Investment in the UK is down, but it is hard to pinpoint exactly where in certain sectors this reduction in investment is really biting.

“If you dig deeper with SMEs, what you find is a great deal of optimism about their ability to leverage and their ability to step in where bigger businesses and less able businesses cannot help. Most businesses owners that Hitachi communicates with have seen that as a potential upside of uncertainty.”

“Whilst the weak pound has been a challenge for many, the UK’s faster-growing small businesses see the upside from uncertainty, highlighting the opportunity for exporting goods and building market share in overseas markets (31%).”

Hitachi Capital Business Finance Business Barometer

As well as the challenges, Wraith-Carter is willing to see the optimism in the potential opportunities Brexit may have for British business. “At this stage we want to see certainty and stability and I think that is more important than the eventual outcome. Hitachi's global stance is really that they would look to have the UK in the EU. From where we are sat we are fairly apolitical.

“If Britain leaves the European Union, then there might be an attitude similar to that of a few decades ago where buying British was a real marker of strength and actually everybody wanted to support British industries, There was once delight in buying products carrying the union's flag. This may have slipped, but in adversity a lot of British consumers and other British businesses may look to support onshore manufacturers and jobs perhaps more than now.”

More than anything Wraith-Carter wishes to emphasise the resilience of SMEs. Outside of all political machinations there remains a genuine desire to stick to business. This doesn’t have to purely mean maintaining the status quo, but also using disruption to carve out advantages in an ever competitive marketplace.