In its fifth annual report on insights into the challenges and mindsets of the SME market across the UK, Edinburgh business advisers and accountants Scott-Moncrieff have found that SME confidence in a post-Brexit future has sunk even further than last year.

A Vote Of No Confidence

Nearly 80% of Small to Medium Enterprises surveyed showed concern over the economic outlook once the UK leaves the European Union, a sharp rise of 10% from the previous year’s findings, while only 28% were concerned about the global outlook as a whole showing that Brexit is firmly on everyone’s minds as the deadline approaches.

51% surveyed said that the impact of the Brexit negotiations was a major factor for their concern, while only 6% believe the government is taking into account the concerns of SMEs in their negotiations with the EU.

“It’s clear that SMEs are looking for clarity around the terms of the UK’s departure from the EU,” said Marc Shenken, partner at Scott Moncrieff.

“While the low pound might make UK products cheaper for overseas buyers now, the introduction of tariffs could have a significant negative impact – so uncertainty around this might be holding SMEs back.”

Investment in People Needed for Growth

The report also identified other areas of further concern to SMEs in the coming months; just under half of SMEs intend to recruit new staff to fill skills gaps in their business – which suggests that competition for high-quality individuals will only intensify. Finding staff with not only the right skills and experience but also the right ‘cultural fit’ and behaviours is a challenge say businesses, with 41% of SMEs concerned about a shortage of skilled staff post-Brexit.

Many (over 60%) plan to invest in staff training as an alternative to external recruiting, upskilling internal teams instead. SMEs see the most need to invest in training to develop digital skills, as well as skills in sales, marketing, leadership and management.

“SMEs are more likely to address skills gaps through training and developing internal teams than by recruiting new staff. This may reflect the impact of leaving the EU and the shortage of technical skills coming through in the market. Developing internal teams is an understandable response.” echoed Chris Goodwin, partner, Moore Stephens.

Technology Woes Continue, but Also Seen as an Opportunity

Technology issues are also causing concern as 29% of SMEs are concerned about the threat of cyber-attack or data breach and 27% are worried about keeping pace with and adopting new technologies.

Fraser Nicol, technology partner at Scott-Moncrieff, said “SMEs are genuinely worried about the impact that improvements in technology will have on their sector and business – whether they will be replaced, or left behind, and whether they can afford to invest to keep pace.”

Conversely, over 50% see new technologies such as machine learning and automation as a medium to long term opportunity for growth, with only 3% expressing concern that they pose an immediate threat to their business.