The economic outlook - Lloyds

The economic outlook
The economic outlook

Gareth Oakley, Managing Director of SME Banking at Lloyds Banking Group

“Recently, the media has been preoccupied with the perceived challenges facing SMEs, but I believe the real story is the opportunity that they still have to grow. There is no doubt that global economic conditions are causing concern among businesses of all sizes, which has impacted confidence, but, although growth forecasts have fallen slightly for 2016, they still represent solid growth for the UK economy.

“Business confidence remains in positive territory and there are signs that the outlook is beginning to improve. Business activity growth across England and Wales regained some momentum in October, having fallen to its slowest since early 2013 in September, according to the latest Lloyds Bank Purchasing Managers’ Index.

“The business activity index for England’s combined manufacturing and service sectors also rose – to 55.5 – up from September’s 29-month low of 53.8. This indicates a rebound in growth and, with interest rates now likely to remain at a record low until well into 2016, SMEs will be eyeing the opportunity to secure the funds they need to take their business forward while borrowing costs stay low.

“For many, reaching that next level will mean winning new business overseas. Despite concerns over global economic stability, particularly in China, our most recently published Business in Britain report showed that 54 per cent of small firms expect exports to increase to the end of the year. British products and services are highly regarded around the world, but securing new international revenue streams comes with its own challenges, particularly with regard to cash flow. There are financial products designed for exactly this scenario though, such as trade finance, a working capital facility that ensures longer payment terms don’t impact a business’ day-to-day operations.”