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SMEs 'lukewarm' about 2017 outlook

More than half of SME owners are not confident about the UK's economic outlook for the year ahead, according to a new survey.

The poll of 900 business chiefs by Close Brothers shows 57 per cent are not feeling confident about the prospects for 2017, rising to 64 per cent among firms at the smaller end of the scale with annual turnovers under £500,000.

"Businesses owners are not taking a negative view, but they are being pragmatic about the UK's economic prospects over the next 12 months," said Neil Davies, chief executive of Close Brothers Asset Finance.

"There are still many unknowns and this uncertainty is reflected in what small business owners are telling us. For example, the value of Sterling is seen as a short-term issue and doesn't create conditions for long-term investment.

"While activity in a number of sectors is stronger due to the weaker pound, helping to boost orders from overseas, cost pressures remain high with price increases being passed onto consumers, which may contribute to an increase in inflation down the road."

Business owners in the North East and North West were the most positive, with 56 per cent and 54 per cent confident about the year ahead. Scottish SMEs were the most pessimistic, with just 36 per cent confident about the economy.

Manufacturing was the most optimistic sector, with 61 per cent of firms confident in their outlook. This was followed by engineering (52 per cent), construction (49 per cent), transport (47 per cent) and print (37 per cent).

"UK manufacturing in on a high at the moment, with recent rates of growth for production and new orders among the best seen over the past two-and-a-half years, according to the Markit/CIPS purchasing managers' index," Davies said.

"And this uplift in the manufacturing sector is reflected in what the survey respondents are telling us, which is that they see 2017 as a time of significant potential opportunity."

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