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"Bullish" small businesses split over Brexit

Nearly three-quarters of small business are predicting growth over the next two years, but are split over the potential impact of Brexit, according to new research.

The Albion Growth Report, which is based on interviews with 1,000 SMEs with more than five employees, found that 73 per cent expect to see either moderate or dramatic growth in the next two years. Only five per cent think they will shrink or wind down.

Looking at the impact of Brexit, 36 per cent think it will help them enter new markets, but 41 per cent believe it will be hindrance.

However, there are significant differences among SME owners towards Brexit by region, size and age that show similarities to the result of the vote in June. Among those groups that are most concerned is millennial business owners aged under-35, of whom half (54 per cent) think Brexit will hinder their ability to access new markets.

Leaving the EU ranks as the single biggest obstacle to growth among small business owners in Scotland and was in third place among those in London. Those groups that are the least concerned about Brexit include sole traders, 56 per cent of whom said it would have no effect on their growth potential.

Overall, however, Brexit is not seen as the biggest potential barrier to growth.

Half of SMEs plan to increase their headcount over the next two years, but finding skilled staff is seen as the biggest challenge for business owners - up from third place in 2015. The problem is most acute in manufacturing, construction, medical and healthcare.

In fact, the outlook for life outside the EU came sixth overall behind perennial concerns such as red tape, regulatory change and difficulties in accessing new markets.

Meanwhile, lack of access to finance - one of the biggest problems cited by SMEs during the financial crisis and subsequent recession - has fallen to 13th on the list, down from fifth last year.

Looking at investment, over a quarter of firms would consider investment from venture capital, private equity or business angels, rising to a third among larger firms.

Patrick Reeve, managing partner at Albion Ventures, which conducted the research, said: "Against a backdrop of profound change, one element that has remained reassuringly unchanged is the optimism underlying the UK's small businesses. Firms are looking to grow their headcount and productivity is on the increase. The biggest barrier to growth, finding skilled staff, is generated by success rather than failure.

"The downside is that the economy is coming under capacity constraints at a time of considerable political uncertainty. While many of the pressures on growth we have seen in recent years have eased, the skills that enable us to compete are in short supply."

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