SMEs in 2024: Optimistic for growth but indifferent about politics

• SME optimism makes a cautious return, with half (47%) of small businesses predicting growth in 2024, up from a quarter (26%) in 2023. 
• However, long-term concerns remain – two-fifths (43%) of SME leaders do not feel optimistic about the UK’s economic future. 
• SMEs are apathetic about the implications of the general election in 2024 – a substantial 43% also think a potential change of government would neither harm nor benefit their business.
• An energy price cap for businesses (32%) and tax cuts for SMEs (38%) top the list of policies small businesses want to see in election manifestos later this year. 

‍Small business optimism returns in 2024, as half of SMEs anticipate growth this year, according to new research from iwoca – one of Europe’s largest small business lenders.

Nearly half (47%) of small business owners surveyed expect that their turnover will grow this year, up from a quarter (26%) at the start of 2023. One in four SME owners expect to increase their business’ headcount this year, up from 6% last year. 

Over a third (35%) think they personally will be better off at the end of the year, compared to just 16% at the start of 2023. 

Long-term doubts remain

Despite a bounce back in short-term optimism, concerns remain about the long-term outlook, with two-fifths (43%) of business leaders feeling pessimistic about the UK’s economic future. Moreover, nearly two-thirds (64%) say the UK is losing its lead compared to other economies globally.

SMEs currently disengaged from election politics

With a UK general election pencilled in for 2024, under half (43%) of SMEs think a potential change of government would neither harm nor benefit their business. A quarter (25%) of enterprises don’t know how a change of government would affect them.

This current political indifference among SME owners translates to a disaffected outlook on political leaders as well. Over one in three (35%) think that none of the current leaders of UK political parties understand the needs of SMEs. Labour leader Keir Starmer narrowly beats out Prime Minister Rishi Sunak, with 23% of businesses stating that he understands SMEs the most, compared to Sunak’s 19%. 

With increased business running costs ranking as the top concern for enterprise in 2024, an energy price cap for businesses (32%) and tax cuts for SMEs (38%) top the list of policies small businesses want to see in election manifestos later this year. 

Christoph Rieche, CEO at iwoca, said: “After a tough year of high inflation for small businesses, it is fantastic to see optimism about growth return. Now that the economic environment is beginning to stabilise, SMEs can see the light at the end of the tunnel and increase their ambitions in 2024. As the UK enters an election year, SMEs are telling us that cuts to taxes are what they would like to see in party manifestos this year.

“At iwoca we’ve been helping more businesses than ever before - for many of them, we know that our funding has been unlocking opportunities to grow but also helping them when trading is slow. We’re proud of the impact we have on each of them and now increasingly the wider SME community.”