UK200Group members comment on UK business confidence for 2016
Members of the UK200Group of independent accountancy and law firms have today responded to conflicting reports on the state of UK business confidence for the year ahead. According to the latest Business in Britain report from Lloyds Banking Group, businesses are less confident about prospects for the next six months, with UK and global demand seen as the biggest threats to their fortunes in 2016.
However, according to Royal Mail’s annual tracker study into the expectations and ambitions of UK SME e-retailers, there is growing business confidence; with eight out of ten SME e-retailers confident that they will increase sales in 2016. This buoyant outlook builds on the sales success of 2015; more than seven out of ten (74%) SME e-retailers increased their sales last year – the highest level in three years.
Duncan Montgomery, tax partner at UK200Group firm Whittingham Riddell, said:
“Business confidence across the board has dipped a little, with a sluggish start to 2016 and in some sectors a small retreat in Q4 2015. However online retail, as shown by the Royal Mail survey, has jumped in confidence on the back of a strong 2015.
“Many businesses are going direct to market, using the web, and in many cases they are competing with their own distributors, whether in a disclosed or undisclosed fashion. For many middlemen this is potentially disastrous news, as so many businesses are looking to swim upstream and begin to build brand loyalty and manufacturing IP of their own.
“Being vertically integrated in many industries is now a must do for long term survival.”
Jonathan Russell, partner at UK200Group member firm ReesRussell, said:
“Certainly the majority of small businesses are not confident about the future, with current political uncertainty over Europe and international unrest not helping. Whilst most small businesses are not directly affected, the impact of these issues on big business and on individuals’ confidence, results in less spending.
“The consumer is still hampered by past debts and low wage growth, which means there is less to spend. Whilst online businesses may be expressing confidence for increasing sales, it has to be asked at what cost?
“Online is becoming increasingly about price and as a result margins continue to be eroded. In particular, with sales to the end user, the ‘private’ trader selling via eBay and Facebook, with little or no regard for the distance selling regulations, increasing at margins which are commercially unsustainable, it is probable that many retail online businesses will struggle.”