UK small businesses (SMEs) are both concerned and optimistic at the same time about their prospects in the next 12 months.

According to a monthly SME Recovery Tracker from ACCA (the Association of Chartered Certified Accountants) and the Corporate Finance Network (CFN), many are ‘breaking point’, and in danger of running out of cash in the next 12 months.

On the other hand, more than a third (38 per cent) are hopeful about growth in the next six months, despite the reality of their financial situation and being unaware of finances available to them.

Although the survey, which polls accountancy professionals on the financial outlook of their SME clients, demonstrates an appetite for growth, two thirds (68 per cent) of UK SMEs are unaware of finances available to them. This is particularly concerning as financial support may be of critical importance to many SMEs across the UK.

The survey shows that accountants believe that more than one in five (21 per cent) SMEs will run out of cash in the next 12 months and more than a quarter will struggle to meet rising payroll costs in April.

This is a result of the hike in National Insurance contributions to fund the incoming health and social care levy and a rise in the minimum wage.

This comes on top of other financial pressures such as surging inflation, which is predicted to be above seven per cent this year, before stabilising, and a rise in interest rates.

It is further compounded by supply chain issues, the energy crisis, complications gaining access to finance.

The picture was worse for Welsh SMEs who are feeling the squeeze of the pandemic the most with almost half (47 per cent) expecting to run out of cash in the next year. Scottish small businesses, in contrast, are the most optimistic, with only seven per cent predicting they will run out of cash.

The survey also found over a third (35 per cent) of accountants state that their SME clients are “feeling more stressed and anxious than usual” – a 15 percentage point increase from pre-Christmas levels.

Claire Bennison, head of ACCA UK, said: “Our research reveals a very uncertain start to the new year for SMEs, countered with optimism about the long term for 2022. However, this essential progress can’t be achieved without the cashflow and people to help them grow, or indeed the resilience to do this too.

“With more than 1 in four (26 per cent) UK SMEs anticipated to struggle to meet payroll in April, the Government needs to seriously consider the economic implications of the planned hike in National Insurance rates and the impact it will have on UK SMEs who serve as a backbone to the UK economy. Ultimately, these figures point to the danger of businesses failing.”

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