More than one in four small and medium-size businesses in the UK are planning to boost their investment this year, new research reveals.
A survey by Virgin Money found that 27% of SMEs plan to invest more in their businesses in the year ahead than during a typical year before the pandemic. Over a third (35%) of SMEs plan to invest between £10,000 and £10m this year, up from 32% in 2020.
Meanwhile, the number of new businesses being started has reached a record high, highlighting growing confidence among entrepreneurs. The annual growth rate in the number of registered companies surged to 8.3% in the last three months of 2020 — the highest since Virgin Money’s Business Pulse began in 2014.
Separate data from Companies House shows that over 90,000 more businesses were created in 2020 than in 2019.
It’s not all good news, though: more than half (57%) of SMEs surveyed currently have staff on furlough and just one in five (19%) expect to be able to retain all furloughed employees after the Coronavirus Job Retention Scheme comes to an end. In fact, more than a third (38%) of SMEs expect to reduce their workforce this year.
On the positive side, nearly one in five (18%) expect to take on more employees in 2021. Nearly half (47%) of SMEs looking to increase their headcount will be doing so due to expansion plans. Around a quarter (26%) say improvements in the economy will make them confident enough to expand their workforce, and 23% say they need more staff to deal with pent-up consumer demand once restrictions are lifted.
Commenting on the findings, Virgin Money’s group business director, Gavin Opperman, said: “It has been an incredibly challenging environment over the last 12 months, but our latest Business Pulse shows that many firms have adapted with incredible pace to the new environment, demonstrating extreme resilience and innovation to navigate through the difficult landscape.
“While there are undoubtedly significant challenges ahead, many businesses remain optimistic and intend to invest for the future as the economy recovers.”