Small businesses in the UK (SMEs) are increasingly more confident in their ability to grow and power the economic recovery, but fears about the ongoing impact of the pandemic lockdown still linger.
According to new data published today by the British Chambers of Commerce (BCC) 63% of SMEs are emerging from lockdown with either concrete plans or intentions to grow their business over the next year.
The manufacturing sector (68%) is particularly optimistic, while 58% of the hardest hit business-to-consumer (B2C) companies including hospitality, catering and retail still anticipate growth.
The research in partnership with Funding Circle — the UK’s largest small business loan platform — surveyed more than 1,000 firms, almost all SMEs.
"We've seen really positive signs since reopening with steady footfall, especially with the turn in the weather over the last week," said Claire Walker, co-executive director of the BCC. "Firms will feel more confident" with more government assurances.
SMEs "will be more willing to invest in jobs and in developing their business", if there is "a safety net of financial support will be provided should there be a need for restrictions which reduce or stop commercial activity in order to protect public health," Walker added.
While the UK economy hasn't yet fully reopened, over half (53%) said they had already restarted or returned to pre-pandemic levels in April, with a further 27% expecting to reach this milestone by October.
By the end of 2021, 91% of businesses expect to have fully restarted, with only 1% not expecting to restart for the foreseeable future.
Many firms said the biggest barriers to reopening are COVID-related, such as the risk of further lockdowns (cited by 38% of respondents) or social distancing requirements (cited by 37%).
Concerns around reduced customer demand (33%), inflation pressure (18%) and recruitment difficulties (14%) are also weighing on UK businesses.
The report also found that access to finance will be key in helping SMEs unlock their full growth potential, with nearly half (44%) believing it will help overcome the remaining barriers they face.
It comes after separate data showed UK's private sector grew at its fastest pace in over two decades in May as the reopening of the economy drove business confidence to a record high.
IHS Markit/CIPS Flash UK Composite PMI showed in May that its measure of private sector growth hit the highest since the index began in 1998, with hotels, restaurants and other consumer-facing services posting the strongest demand.
The figures also follow a robust outlook for the UK economy as reopens back to full capacity in the coming months, with private sector economists joining the Bank of England in predicting a historic year for growth.
Monthly private sector forecasts compiled by the Treasury also indicate a big upgrade in forecasts for Britain's economy. Analysts are now predicting the best year for growth since the aftermath of the Second World War.
The average of 23 forecasts made since the start of May show economists are now predicting GDP to grow 6.5% in 2021, compared with a forecast of 5.7% made last month. It marks the third month in a row that expectations have been upgraded.
The highest forecast comes from Goldman Sachs (GS), which now expects the economy to expand by 8.1% this year. The lowest, from macro forecaster Heteronomics, is 4.9%.
Watch: Will the UK economy bounce back in 2022?