Small businesses blame Brexit for savings slump
Businesses planning to increase the amount in their savings account cite concerns over the impact of Brexit and the long-term economic outlook
The UK’s small and medium sized businesses have suffered a 20% drop in savings in comparison with the period leading up to the EU referendum, according to research from Hampshire Bank Trust.
They annual study found that the average balance of those surveyed was £446,000, while the average balance of current accounts has also seen a 3% drop on 2016 to £409,000.
This means that, on average, for every £1 in a small business current account, there is another £1.09 in a savings account; dropping from £1.31 in 2016.
Over the next year, 56% of respondents said they were intending to leave the amount they had in business savings as the same, while 30% planned to increase the amount and 14% wanted to decrease it.
Of those that were planning to increase the amount, 27% claimed it was because they had concerns about the economic impact of Brexit and 25% due to the long-term economic outlook. This was a significant increase on the 8% and 4% respectively that expressed concern in 2016.
35% of those that planned to decrease the amount in their savings account blamed the long-term economic outlook.
However, the survey did find signs of optimism, with 34% of those increasing their savings saying they were doing so to save for a major purchase – in comparison with 17% last year.
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Business infrastructure (28%) was the most common planned use for savings, followed by investment in research and development (25%).
Stuart Hulme, director of savings at Hampshire Trust Bank, said:
“While we are continuing to see growth across our business savings portfolio, the outcome of the EU Referendum and the current uncertain economic and political environment is clearly having an impact on small business savings balances and habits.
We believe that at times like this it is important for businesses to remain focused on making more of their hard-earned cash and it is positive to see that UK SMEs are continuing to plan for the future.”