Coronavirus: UK SMEs have cautious optimism for third-quarter rebound

Lucy Harley-McKeown
·2 min read
A small business and upcycling concept.
UK SMEs have outperformed expectations. Photo: Getty

A stronger-than-expected second quarter performance for UK small and medium-sized enterprises (SMEs) has led to a boost in optimism among business-owners.

Scores from the Barclaycard Payments’ SME Barometer jumped from 79 out of a possible 200 points at the start of Q2, to 95 points at the start of Q3.

Businesses reported, on average, a 14% decline in revenue for their second quarter, compared with the first quarter. The drop was half as severe as the predicted 28% decline.

36% of SMEs share a positive outlook for their own business this quarter, up 15% versus Q2. Across all sectors, SMEs predict a 5% increase in revenue for Q3 compared to Q2, which grows to 14% over the next 12 months.

Levels of SMEs reporting that coronavirus had negatively impacted their business dropped. They were still high, however, at around 74% of businesses. This was down from 82% in Q2.

Emma Jones, founder of Enterprise Nation, said: “We’ve seen SMEs begin to emerge from lockdown in a place of strength – a huge testament to their resilience and their willingness to seek and take advice. It’s heartening to know that the government support measures and resources have helped our nation’s small businesses during the pandemic.

“At Enterprise Nation, we’ve offered different types of support for SMEs at various stages of their journey, such as our Make a Plan diagnostic tool. We are hopeful that SMEs will continue to push through these challenging times and keep playing a role as the heart of the UK economy.”

READ MORE: Pay, debt and spending: how the UK economy is faring this week

Barclaycard Payments data for the first half of Q3 also shows the average daily value of SME transactions is up 60% compared to the daily average for Q2.

However, card transactions for the first half of Q3 remain 13% behind the same point last year, indicating that card-taking SMEs have a way to go to match pre-pandemic performance.

The research found that SMEs are preparing for recovery, with four in five planning to invest over the next 12 months – up from two thirds last quarter.

The biggest change SMEs have made to mitigate the effects of coronavirus is reducing staff numbers (26%), which rises to 47% amongst medium businesses.

Rob Cameron, CEO, Barclays Payments, said: “Despite uncertainty and business disruption, SMEs are outperforming their own revenue expectations and beginning to look to the future by returning to work and thinking about investment.

“We welcome these signs of growth and optimism – and hope that SMEs continue to take advantage of the support available, whether from finance partners or the Government, to continue this recovery.”