Small businesses across the UK have increased the amount of cash they hold in current accounts by over 78% over the past two years in anticipation of a Brexit fueled credit crunch.
The hoarding reflects growing fears over the economy and a desire to have cash assets available to fund any shortfall in trade or credit occurring as a result of a recession.
Research by the Hampshire Trust Bank (HTB) due to released this week also reveals that business owners also want access to cash to be able to take advantage of opportunities to invest which may arise as a result of Britain leaving the European Union.
“More money is now being stored in current accounts to fuel growth and reduce loans,” said Stuart Hulme, director of savings and marketing at HTB. “With such a large amount of economic uncertainty, it reflects a desire to have better cash balances.”
A real issue for business owners is that they are unable to make long terms decisions without knowing the outcome of the Brexit negotiations. Many began stockpiling raw materials ahead of the original Brexit date in March and have started to do so again as the new deadline approaches next month.
Equally there any many businesses which are less affected by a potential supply issue but may have trouble selling to the common market. The uncertainty is proving the most difficult element of the Brexit process.
Emma Jones, founder of the small business network, enterprise Nation, told the Sunday Times: “At times of uncertainty, small business owners want to know they have cash in the bank. Conserving cash is putting off key decisions such as hiring staff and buying new equipment, but just imagine the economic bounce we’ll see when the position on Brexit is clear and money starts flowing again.”
The report by HTB surveyed more than 500 companies with turnovers ranging from £500,000 to £100m.