SMEs in 2024: Optimistic for growth but indifferent about politics

In 2024, there's a resurgence of optimism among small and medium-sized enterprises (SMEs), with half of them anticipating growth, as highlighted in a recent study by iwoca, a European lender to small businesses.

The survey shows a positive shift in expectations, with nearly half (47%) of small business owners predicting an increase in their turnover this year, a significant rise from 26% at the beginning of 2023. Additionally, a quarter of SME owners are planning to expand their workforce this year, a notable increase from the mere 6% who had such plans last year.

Personal financial outlooks are also improving, with over a third (35%) of small business owners believing they will be in a better financial position by the end of the year, up from just 16% who felt this way at the start of 2023.

Despite this short-term optimism, there remains a degree of scepticism about the long-term economic prospects in the UK. Two-fifths (43%) of business leaders are pessimistic about the country’s economic future, and nearly two-thirds (64%) perceive the UK as lagging behind other global economies.

The prospect of the 2024 UK general election seems to have a divided impact on SMEs. Under half (43%) think a change in government would neither positively nor negatively affect their business, while a quarter (25%) are uncertain about the potential impact of such a change.

This ambivalence towards political developments is also reflected in SME owners' attitudes towards UK political leaders. Over a third (35%) believe that none of the current party leaders fully grasp the needs of SMEs. In a comparison between Labour leader Keir Starmer and Prime Minister Rishi Sunak, 23% of businesses feel Starmer understands SMEs better, marginally ahead of Sunak’s 19%.

As 2024 unfolds, the primary concern for businesses is the rising cost of running a business. In response, small businesses are advocating for specific policies in the upcoming election manifestos, with 32% supporting an energy price cap for businesses and 38% favouring tax cuts for SMEs.

Christoph Rieche, CEO at iwoca, said: “After a tough year of high inflation for small businesses, it is fantastic to see optimism about growth return. Now that the economic environment is beginning to stabilise, SMEs can see the light at the end of the tunnel and increase their ambitions in 2024. As the UK enters an election year, SMEs are telling us that cuts to taxes are what they would like to see in party manifestos this year.

“At iwoca we’ve been helping more businesses than ever before - for many of them, we know that our funding has been unlocking opportunities to grow but also helping them when trading is slow. We’re proud of the impact we have on each of them and now increasingly the wider SME community.”