SMEs planning to invest in coming year - report

More than a quarter of SMEs (27 per cent) plan to invest more in their businesses in the year ahead compared to a typical pre-pandemic year, according to a survey by Virgin Money.

These findings were reported in the Virgin Money Business Pulse, which provides a comprehensive insight into the performance of the UK 's SMEs and the environment in which they operate.

The Business Pulse surveyed 1,002 SME decision makers through Censuswide during the first two months of this year.

Overall, the report marked an optimistic future for businesses ' in the upcoming year and revealed a large focus on growth.

The business creation indicator was at a record high in the last three months of 2020 as the annual growth rate in the number of registered companies surged to 8.3 per cent.

This underlined by data from Companies House which shows the pandemic has seen over 90,000 more businesses created in 2020 than in 2019, highlighting a growing confidence among entrepreneurs.

It was also found that over a third (35 per cent) of SMEs plan to invest between £10,000 and £10 million this year, a rise on 32 per cent from 2020.

While the relaxation of lockdown measures saw the economy bounce back with quarterly GDP up 16.1 per cent, business performance and outlook fell again to 42.9 in Q4 when restrictions returned.

As a result of lower business performance, more than half (57 per cent) of SMEs reported currently having staff on furlough, with just one in five expected to be able to retain all furloughed employees after the Coronavirus Job Retention Scheme comes to an end.

In more positive news, however, 18 per cent expect to take on more employees in 2021 and around a quarter say improvements in the economy will make them confident enough to expand their workforce and cater to pent up consumer demand.

Group business director at Virgin Money, Gavin Opperman (pictured), said: “It has been an incredibly challenging environment over the last 12 months, but our latest Business Pulse shows that many firms have adapted with incredible pace to the new environment, demonstrating extreme resilience and innovation to navigate through the difficult landscape.

“While there are undoubtedly significant challenges ahead, many businesses remain optimistic and intend to invest for the future as the economy recovers.

“We will always be led by our customers, evolving our approach to help them plan and finance the changes needed for whatever the future brings. ”