SME health improves across the UK as confidence begins to recover

SME Health Check Index at its highest level in 18 months, continuing the positive trend of 2016

UK SMEs performed as their highest level since the end of 2015 in Q2'17, improving in six of the eight key performance indicators tracked in the SME Health Check Index.

The Index is a quarterly economic tracker, compiled by the Centre for Economic and Business Research Limited(CEBR) in association with banking organisation CYBG PLC. It showed SMB health reaching its highest level in 18 months during the second quarter of the year, following a drop in Q1.

The increase marks a return to the improving performance observed throughout 2016. Overall, the Index rose by 12 points, from 46.9 in Q1 to 58.9 (out of 100) in Q2.

Various factors contributed to the rise, such as increased willingness to lend to SMEs; a falling number of business bankruptcies; and the plateauing of business costs.

Although suppressed business confidence may have had an effect on the improvement, CEBR says that overall confidence is higher than it was last year.

David Duffy, CEO at CYBG, welcomed the results with "cautious optimism." He said, "This quarter's Index marks a return to the improving SME operating environment we saw throughout 2016 following a fall in the index in the last quarter." However, he warned against complacency, adding, "The UK's future economic success will depend in no small part on the strength and general ‘health' of our SME businesses."

CYBG announced that it would make a minimum of £6 billion available for lending to SMEs from 2017 to 2019, to help fuel business growth.

Across the UK

Alongside Scotland, Wales and Northern Ireland, eight of the nine English regions improved their Index score in Q2; only Yorkshire and the Humber experienced a dip. The North East led in overall highest performance, followed by Wales and the East Midlands, while the West Midlands and Northern Ireland made the largest gains.

Oliver Kolodseike, senior economist at CEBR, said, "The significance of SMEs to the economic well-being of the UK is indisputable, and it is therefore encouraging that the SME Health Check Index emerged from its first quarter weakness and reached a one-and-a-half year high. It is particularly encouraging that lending to SMEs has picked up, thereby supporting businesses in their growth aspirations."