UK growth companies make EU Single Market and EU workforce top priorities
· 82% of ‘Gazelles’ want continued access to the Single Market and 58% to the EU workforce post Brexit
· 69% fear economic downturn post referendum
· Number of firms finding it hard to access finance doubles from last year to 51%
· However, 67% expect to increase revenues over the next 12 months, with 43% anticipating double digit growth
ECI's 2016 Growth Survey, the only annual survey in the UK focused solely on high growth companies, reveals that Britain’s ‘gazelles’ overwhelmingly (82%) want the Government to prioritise continued access to the European single market in the upcoming Brexit negotiations with the European Union.
The survey, carried out in the weeks immediately following the EU referendum, also shows that 58% of high growth companies want to be able to continue hiring EU workers. They remain challenged by significant skills shortages with 77% citing some level of skills shortage primarily in technical, engineering and R&D roles and say that apprenticeships should be expanded and links between educational bodies and business improved.
CBI Director-General Carolyn Fairbairn, who wrote the foreword to the survey, said:
“The latest ECI Partners growth survey provides a timely reminder of what growth companies need to succeed. As the UK seeks to forge a new relationship with the world, raising the productivity of our economy has never been more important. It is productivity growth that will help spread prosperity outside London and the South East and drive the UK economy through the uncertain times ahead. The success of the UK’s fastest growing firms will be vital in achieving this goal.
“We face challenging times ahead – but there are opportunities as well. The UK remains a vibrant and open nation, and one of the best countries in the world to do business. Now is the time to take advantage of opportunities for productivity growth to make it even better.”
What growth companies fear?
Last year’s ECI Growth Survey revealed that these companies overwhelmingly backed Britain’s membership of the EU, with 91% saying they were against Brexit. One year on, high growth companies say they are worried about the economy with more than two thirds of respondents saying what they fear most right now is a downturn.
Access to finance worsens
Companies also say that access to finance has sharply deteriorated, with more than 50% saying it is ‘difficult’ or ‘very difficult’, the highest reading since 2012 and up from just 22% last year.
Despite this, the survey shows that high growth companies are prepared to meet the challenges ahead. Almost a third plan to significantly increase investment and hiring, against just 6% who plan to cut. Significantly, more than two thirds of companies expect they can increase their revenues over the next 12 months, with 43% anticipating double digit growth. North America and Europe remain their top export destinations.
ECI Partner Chris Watt said:
“Economists have been very gloomy about our economic prospects post the Brexit referendum, so it is heartening to see such grit and resilience coming from Britain’s high growth companies. Our seventh annual growth survey shows that businesses are ready to invest for growth, and to keep generating jobs. The recent data has been more positive and firms like ECI have significant funds to invest. Let’s make sure we all continue to do our bit to create successful growth businesses.”
Sean Ramsden, CEO of British food wholesaler Ramsden International, said:
“We are an exporter so we have benefited from the fall in the value of sterling. Our hope is that post-Brexit, Britain will be able to negotiate better trade deals with countries like Canada and Australia. We are seeing demand grow at a faster rate in markets outside Europe”
Jonathan Elliott, CEO of price comparison website Make It Cheaper, said:
“I wanted to remain but the decision has been made and we have to be careful not to talk ourselves into recession. I think there’s a lot of EU regulation out there that may have originally been well intended but has been badly executed. It would be good to see the removal of some unnecessary red tape.”
Guy Mucklow, founder of PCA Predict, an address verification service for ecommerce, said:
“Will press ahead with plans to invest in the US and Canada, despite Britain’s decision to leave the EU, but admits it has been costly The fall in the value of sterling since the referendum has added to the costs of funding our US business.
“Another consequence is the likelihood of lower interest rates over the long term and even the possibility of having to pay banks to deposit money with them. It could become a significant cost centre.”
Louis Rix, founder of Carfinance247, said:
“Lower interest rates benefit us as they have a big impact on disposable incomes, which means people are more likely to want to buy cars. We have no plans to cut investment, but we’ll certainly be more cautious over the coming months.”
Emma-Jane Packe, Managing Director, The Supper Club (part of Prelude Group), said:
“Post-referendum, our members are most concerned about declining inward investment and the strength of the sterling. In the immediate term, they want the economic confidence to make decisions on recruitment, investment and R&D – areas where government can make an impact now.” – Over 30 of The Supper Club members participated in the survey including two cases studies, PCA Predict and Ramsden International.