SME confidence is on the rise as employers make plans to expand their workforce

Official research has found increasing confidence amongst SME employers, with 26 per cent saying they expect to increase their employee headcounts over the coming year.

The findings from the Small Business Survey, carried out by the Department for Business, Energy and Industrial Strategy (BEIS), show that the number of small employers – those with fewer than 250 employees – that expect to employ more staff is more than two-and-a-half times those who expect to see their payrolls shrink.

Despite the impact of the pandemic, the proportion of employers expecting to take on more staff has already exceeded 2018 levels (25 per cent) and is approaching the 28 per cent recorded in 2019.

Meanwhile, the proportion of employers expecting to reduce their headcounts in the next year has fallen sharply from 16 per cent in 2019 to just 10 per cent this year – despite the furlough scheme coming to an end this month.

The accommodation and food, arts and entertainment, health, information and communication and administration were the sectors most likely to foresee rising numbers of employees.

The survey also uncovered optimism about the prospects for revenue growth, with 41 per cent of SMEs expecting turnover to grow in the coming year, while just 16 per cent expected to see a fall.

Around 67 per cent of SMEs reported that they had made a profit or surplus during their most recent financial year, with profitable businesses being relatively evenly spread across micro, small and medium businesses.

Link: Longitudinal Business Survey: SME Employers – UK, 2020

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