Home Business News London’s SMEs show decline in health due to falling employment

London’s SMEs show decline in health due to falling employment

by LLB Reporter
12th Sep 18 1:13 pm

The health of SMEs in London has declined in the second quarter of 2018, according to latest research by CYBG, in partnership with leading economic consultancy, the Centre for Business and Economics Research (Cebr).

The report has revealed that the SME Health Check Index in London has dropped four points to 45 in Q2, due to a 29,000 fall in the number of people employed in the capital between the first and second quarter. This dragged the annual rate of employment growth to the lowest level since the start of 2017. However, despite the ongoing economic uncertainty, the confidence indicator did improve in the second quarter to 46.

The SME Health Check Index is designed to measure SME business performance and the business and macroeconomic environment within which SMEs operate.

At a national level, the reports highlights that the health of UK SMEs was stable for the second quarter of 2018, but at 47.1 points, the Index is at its second lowest level in four years.

Key data show the economy did regain some momentum in Q2. Following the wide spread disruption caused by adverse weather at the start of the year, activity was pushed into the second quarter, particularly in construction sector. However, despite the improvement, there was no material increase in the Index score due to the slowdown in employment growth and fall in lending.

Gavin Opperman, Group Customer Banking Director, at CYBG, said: “The latest SME Health Check Index demonstrates just how much can change for SMEs quarter to quarter. Our last report indicated a difficult start to 2018 and the weather conditions didn’t help matters, but the second quarter does provide some grounds for optimism. GDP has made gains, and the Index remains steady, dropping by only 0.5 points. This all suggests the UK economy could be on the road to recovery.

“However, on a closer look, there is still indicators causing concern, which doesn’t provide as positive a story across the UK. Employment growth is down, due to a tightening in the labour market, and, most important for us, lending has not improved. Our critical task is to ensure that the operating environment for SMEs – exporters, importers and entirely domestically focused businesses alike – is as uninterrupted as possible. As a lender, we are doing our bit and remain committed to supporting SMEs navigate this challenging market and are on track to meet our £6bn three-year lending pledge.”

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