Recession means retirement is moving even further away for south west SME owners

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Vast majority of owner-managers continue to suffer from the freeze in bank lending and credit facilities, according to Clifton Asset Management survey

More small business owners in the South West see their retirement prospects receding further into the distance than in any other part of the country, according to a new survey.

And while a similar number remain confident that they will not have to make job cuts in the near future, they are scathing about the Government’s attempts to persuade the banks to restore lending and credit facilities to SMEs, many of whom have also been hit hard by the falling value of sterling against the euro.

These are among the findings of a survey carried out by Clifton Asset Management (CAM), the UK’s leading alternative to banks for owner-managed businesses’ finance and strategic planning, who questioned more than 100 of the region’s business owners about their retirement plans.

Neil Greenaway, managing director at CAM, said there had been a 10 per cent increase on the previous survey in the numbers of South West SME owners who felt that their retirement was further away now than it was a year ago.

“In our last quarterly survey, 75 per cent of those questioned said their retirement had been put on hold, and this was in itself an increase on the previous figure of 52 per cent,” he said.

“The fact that we have seen a second consecutive increase, to 85 per cent, provides compelling proof of the severity of the situation we now find ourselves in, and of the direct impact it has on people’s retirement plans. Indeed, a full 36 per cent of respondents in the South West say they now do not plan to retire at all, up from 19 per cent last time.

“We have a heard a lot from the Government about the amount of pressure it is putting on the banks to start lending again. However our survey proves that this has yet to benefit those at the ‘sharp end’, with only 7 per cent of South West businesses reporting any noticeable improvement in the situation, in terms of their bank manager being willing even to discuss existing or new credit lines.

“Lord Mandelson’s appointment as Secretary of State for Business does seem to have had some positive effect, with 15 per cent now believing that the Government does at least recognise the crucial role of owner-managed businesses for the UK economy – a figure which stood at 9 per cent last time.

“Of course it is also encouraging that 80 per cent of those who took part in our survey say they expect to maintain staff numbers at their current level over the next six months, although with the UK now having officially gone into recession, one wonders how long this optimism will last.”

The Clifton Asset Management research also found that over a third – 37 per cent – of companies say they have been affected by the pound’s dramatic fall against the euro in recent months, while over two-thirds (72 per cent) of small business owners say it is not currently viable for them to pay into a company pension scheme.

Other key findings of the survey are:

 

  • 47 per cent of South West business owners plan to retire between the ages of 55 and 65, down from 54 per cent in the last survey
  • More than a quarter (29 per cent) say they definitely will, or may, start a new business when they exit their current one
  • More than a third, 42 per cent, believe the South West is in a better position to weather the recession than the rest of the country.

 

“Clearly the immediate outlook for the SME sector is not all bad and it is interesting that almost a third of the business owners who took part in our survey say they either may, or definitely will, start another business when they exit their current one,” concluded Neil Greenaway.

“Nonetheless, the key findings of our latest survey tell their own story, particularly in regard to people’s retirement and pension plans, and the absence of any sign of a thaw in the freeze on bank lending.

“Meanwhile to exacerbate the situation, it is deeply worrying that well over a third of businesses say their spending power has been further eroded in recent weeks by the fall of sterling against the euro.”