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September 13, 2013 - Rachel Miller

Buoyant UK SMEs forecast significant growth

UK businesses are more confident about their future growth than they have been in the past three years, according to the latest annual business growth survey by Santander Corporate & Commercial. And the findings show that small firms are significantly more confident than larger companies.

The poll, which looked at growth expectations for companies with turnover of up to £20 million, revealed that businesses are predicting turnover growth of an average 134% in the next five years, equivalent to 18.5% a year, and up considerably from the 88% five-year growth forecast in last year's survey.

Around one in eight (13%) are looking to hire new staff as an immediate priority and twice as many businesses are looking to grow through acquisitions (14%) than a year ago (7%).

Smaller companies are the most optimistic. Firms with a turnover of £50,000 –£100,000 are forecasting 607% growth over the next five years. This is followed by businesses with a turnover of £250,000–£500,000 (204%) and £1 million–£5 million (117%). The least optimistic were the largest firms, with businesses with a turnover of £5 million–£20 million predicting a 44% increase in turnover over the next five years.

SMEs also reported they are turning to acquisitions for growth, with the number reporting this to be an immediate priority doubling to 14% this year, up from 7% in 2012. The number looking to grow organically also rose to 32%, compared with 29% in 2012.

Despite the increase in optimism, however, the research shows that businesses are still facing stiff challenges – 50% of those polled reported that they are focused on "survival" as an immediate priority. This is down from 54% in 2012, but higher than in 2011 when the figure stood at 47%.

Marcelino Castrillo, head of SME at Santander Corporate & Commercial, said: "Our latest growth survey reveals the most optimistic five-year outlook for three years. It also found that since 2011, more SMEs are looking at growing both by acquisition as well as organic expansion, which we believe is positive news for the UK economy. Figures that indicate firms are increasing efforts to hire new staff are also to be welcomed."

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