SMEs missing out

Poor investing leaves UK SMEs missing out big time

The lingering effects of Brexit are haunting Britain’s small business operators

UK SMEs are holding record levels of cash as uncertainty surrounding Brexit persists after the fact — and it is costing them billions of pounds.

In the past 12 months, SME cash reserves have increased by more than three percent to £333bn — the highest level on record, according to analysis by the Centre for Economic and Business Research (CEBR).

Nearly 58 percent of all SME cash reserves are held in instantaccess accounts. By doing this, firms are missing out on billions of pounds in interest.

With SMEs currently holding £191bn in instant-access accounts and receiving an average rate of 0.41 percent, they are on track to earn £566 m in interest in the

Switching to

leading

instant-access

rate would

save billions

coming year. If they were to switch to a market-leading instant-access rate of 1.40 percent, they would earn £2.7bn — £2.1bn more.

UK SMEs currently hold £141bn in fixed-rate deposit accounts earning on average 0.86 percent, meaning they are expected to earn £1.2bn in the next 12 months. If they invested at the 1.95 percent one-year fixed rate, they would collectively earn £2.8bn in interest: £1.6bn more.

That would fund a year of salaries for more than 123,360 workers on the UK average annual salary of £29,588. Separate research conducted by YouGov on behalf of Flagstone (which commissioned the study) reveals why SMEs are reluctant to shop around for a better rate.

Almost four in ten of the 500 firms surveyed said the hassle of opening an account is the greatest barrier; around a third said the perceived risks of depositing money with a challenger or nonhigh-street bank was the biggest deterrent.