Azets Group, Europe’s largest regional accountancy and specialist business advisor to SMEs, with c120,000 clients across the UK and Nordics, has published its latest Azets SME Barometer, revealing ambitious growth plans among European SMEs despite a significant drop in optimism around the economic outlook.
The second wave of the Azets SME Barometer, first launched in August 2021, surveyed 1,093 SMEs from all sectors in the UK, Denmark, Finland, Norway, and Sweden, and reveals only half (51%) of SMEs are optimistic about the economic outlook, down from more than two-thirds (68%) last summer. Despite this, 62% of SMEs expect their turnover to increase in the next 12 months, while 53% forecast improved profit.
Key findings:
- 51% of SMEs are optimistic about the economic outlook
- 62% of SMEs expect their turnover to increase in the next 12 months
- Cost inflation is the biggest day-to-day challenge for SMEs
- Two-thirds (64%) of SMEs are unable to recruit people with the right skills
- 61% of SMEs say digitalisation, ranked the second biggest opportunity, is key to business efficiency
- 45% of SMEs do not have the skills or competencies to address Environmental, Social and Governance (ESG) issues
- 71% of SMEs are not currently focused on reducing their carbon footprint
- 16% of UK SMEs have experienced a cyber-attack or serious data breach
Covid still ranks as the biggest threat across all regions, whilst business models and digitalisation lead the growth opportunities. Over half of all SMEs (54%) say they will increase digitalisation in the year ahead, with cyber-security, data analytics, remote working, e-commerce, and process automation ranking as top priorities.
Cyber-security is of particular importance to UK SMEs, 16% of which admitted to experiencing a cyber-attack or serious data breach.
36% of SMEs said cost inflation remains a challenge in January 2022. This is now likely to be much higher following Russia’s invasion of Ukraine in February 2022 and the subsequent long-term impacts of Western sanctions, higher global prices for commodities and further supply chain disruptions.
Employee wellbeing and recruitment are also key challenges, as almost two-thirds (64%) of all SMEs report a struggle in recruiting people with the right skills.
Addressing these challenges could have reduced capacity for focus on ESG issues, with 71% of SMEs not currently focused on reducing carbon emissions and 85% not currently measuring the carbon footprint of their business. Expertise, time, cost, and supply chain due diligence are among the biggest challenges in relation to ESG.
Chris Horne, Azets Group CEO, said: “The Covid crisis has been particularly tough on SMEs, not only because they are more prevalent in the worst-hit sectors but also because they have fewer buffers – including access to liquidity – than bigger organisations. It is therefore no surprise optimism around the economic outlook has reduced, impacted by the potential for new Covid variants and the global cost of living crisis.
“The findings of this Azets SME Barometer were collated just before the conflict in Ukraine began. Our first thoughts are around the enormous humanitarian tragedy taking place. Secondly, the impact on the global economy and the SME sector will be immense when we start to analyse the effect of sanctions, price fluctuations on commodities and disruption to the global supply chain.
“Despite this new uncertainty, the issues and priorities for SMEs uncovered in the Azets SME Barometer are still hugely relevant, from dealing with cost inflation and skills shortages, to cyber-security threats, tackling ESG commitments, and general unpredictability. SMEs remain committed to pivoting their business models and embracing digitalisation as the biggest opportunities to fuel growth. It is this flexibility and agility that will be key for SMEs as they continue to build their resilience.”
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Notes to editors
- Chris Horne, Azets Group CEO, is available for interviews
- All SME clients featured in the Azets SME Barometer report are available for interviews
- A full copy of the report is attached
- Additional insights are available on request, subject to availability
- The second wave of the Azets SME Barometer was carried out in January 2022 with 1,093 SMEs participating across the geographies in which Azets operates: Denmark, Finland, Norway, Sweden, and the UK
- Percentage of businesses by sector: Financial and professional services (22%), Manufacturing and construction (20%), Retail and wholesale (14%), Hospitality, leisure, and transport (13%), Media and technology (6%), Other (25%)
- For the purposes of this study, a business qualifies as an SME if it has fewer than 250 employees and/or less than £50m annual turnover (or local equivalent)
- The research was conducted online by the independent global research firm Echo Research
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About Azets Group
Azets is an SME focused international accounting, tax, audit, advisory and business services group, with 160 offices across the UK and Europe, over 6,500 employees and 600 Partners. In the UK, Azets is the largest regional accountancy and business advisor to SMEs and the ninth largest accountancy business.
Blick Rothenberg, the award winning international corporate and private tax and accounting brand, and Nordic brands Karabingruppen, Legeregnskap, Rantamâki, and Idur are also a part of Azets Group.
The Azets client experience is based on delivering a highly personalised service, through its local office network and its proprietary digital workplace technology, ‘Azets CoZone’. A unique cloud-based portal, Azets CoZone offers SMEs a market leading digital solution, with instant access to information about their business that simplifies workflows, increases operational productivity, and supports a more productive client relationship.
Across its network of offices, Azets supports c.120,000 clients across the UK and Europe. Clients include enterprises, SMEs, large scale business, public sector, and private clients, across multiple sectors.