But outlook is optimistic
Following sustained political and economic uncertainty two years on from the Brexit vote, 72% of London SMEs have found it harder to attract investment or raise funding, compared to a UK average of 49%, according to the latest exclusive Citibase Business Confidence Index. However, on the brighter side, 61% have reported a positive or no impact on revenue since the referendum vote, however this is slightly lower compared to a national average of 67%.
The survey of 522 London SMEs (part of a wider survey of over 1,000 by flexible office champion Citibase) has revealed that despite this uncertainty, 76% are confident that the Government will negotiate a deal that is good for SMEs, up from 70% in Q1 this year and just 39% at the end of 2017. When it comes to departure terms, 50% would prefer a soft Brexit, up from 31% earlier this year, highlighting a significant shift in opinion.
London SMEs’ optimistic outlook continues, with 82% of those surveyed confident that the Government will meet the March 2019 deadline to complete negotiations, compared to just 30% in the South East and 25% in Scotland, reflecting stark differences of opinion across the nation. However, despite this show of confidence, an overwhelming 79% of London SMEs would still welcome the chance to ‘press reset’ on Brexit – and remain a part of the EU, compared to 66% nationally.
As a result of the current uncertain situation, London’s SMEs are particularly ‘afraid of commitment’, with a staggering 87% now preferring office lease lengths of three years or less – one of the highest figures in the country. This is up from 57% at the start of 2017, providing concrete evidence that risk-averse SMEs do not want to be tied into offices with long contracts.
Steve Jude, CEO of Citibase, comments: “Despite remaining optimistic for the future with confidence in the Government to deliver them a good deal, almost three quarters of London’s SMEs have reported struggling to raise funding since the Brexit vote. This uncertainty is resulting in a ‘fear of commitment’ and causing a seismic shift in the way they work, with almost 9 out of ten now preferring office contracts of less than three years. They crave the freedom that comes with flexible work spaces which don’t tie businesses down to long term commitments.”
“It’s not just our survey that highlights the flexible office revolution. CBRE also found that 92% of building owners surveyed agree that flexible office space is on the brink of becoming mainstream, and our growing presence in the Capital is evidence to this, with our new openings and expansions across the city, including: Knightsbridge, Green Park, Victoria and Tower Bridge. With widespread media coverage regarding building owners losing vast sums of money, as traditional long office leases become obsolete, smart building owners are increasingly turning to flexible office providers like Citibase, who can transform their underused spaces, whether a single floor or an entire building, into profit-generating assets packed with a vibrant community of SMEs.”
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