The mid-market sector is now the “most finance-constrained segment of the real economy.”
I’ve analysed ACCA’s Global Economic Conditions research and how it relates to the Autumn Statement.
The UK recovery throughout 2013 was very robust, but has started to slow down significantly since the end of last year, weighed down by weakness in Europe and low real income growth at home. Here’s what our business confidence readings look like – all saved to here: http://share.pho.to/88bfB.
It’s clear from our analysis that the mid-market is holding up best, but even those very dynamic firms can’t resist the pull of gravity. We note the significant loss of confidence among financials. New orders are up, especially for the mid-market, while other parts of the real economy have seen trends slow in 2014. And job creation, while up significantly year-on-year, is definitely slowing across all size-bands.
ACCA / IMA Global Economic Conditions Survey
When it comes to Small and Medium Sized Enterprises (SME) access to finance, the Treasury must be feeling very relieved. Our analysis of finance constraints and growth capital index data for recent quarters is insightful- it’s worth noting how well micro and small firms are going – as recent as mid-2013 they were lagging the rest of the UK economy significant in terms of access to finance, but they’ve caught up very quickly since.
“This is not likely to last forever, as today’s liquidity conditions are extraordinary. But there are reasons to be confident. To me of course, what is news is that the mid-market isn’t better catered for. They are now bizarrely the most finance-constrained segment of the real economy (not least because they are innovators and exporters). But they clearly also recognise that government support is increasingly targeted squarely at them.
Is any of this going to lead to an increase in investment? Well, so far capital spending by SMEs and the mid-market has soared year on year from 2013. But it’s very interesting how large corporates are weighing down capital spending – lots of stories in the press about falling capital expenditure among listed firms; it’s a longer-term trend that the UK and the world needs to address.
GECS can be found here: