Forecasting the landscape for UK SMEs in 2024: Trends, challenges and opportunities

by | Jan 4, 2024

In 2024, UK SMEs are in for a mixed bag. The economy’s showing promise, but inflation and Brexit are throwing in some curveballs. Tech and sustainability look like winning strategies, while hiring and new regulations might need some untangling. With government backing and a knack for innovation and eco-friendly practices, UK small businesses are gearing up for an eventful and challenging year ahead.


Economic outlook and policy landscape


Official data from The Office for Budget Responsibility (OBR) indicates a positive trajectory for SMEs in the UK. The Gross Domestic Product (GDP) growth rate is forecasted to be around 0.7% in 2024, signalling a steady recovery from the pandemic-induced downturns. However, inflation rates remain a concern, projected to hover around 3.2%, posing challenges for SMEs in managing operational costs.


Brexit’s impact continues to linger, with the UK’s trade dynamics evolving. According to HM Revenue and Customs (HMRC), trade disruptions have stabilised to some extent, but uncertainties in regulatory frameworks persist, affecting SMEs’ international trade operations.


Technology adoption and innovation


The 2024 Technology Insights Report by TechUK highlights a surge in SMEs adopting advanced technologies. Approximately 70% of SMEs plan to invest in cloud-based solutions, while over 60% are integrating AI-driven automation into their operations. Moreover, data from the British Business Bank confirms a notable uptick in SMEs utilising fintech services, with a 25% increase in loan applications through digital platforms.


Sustainable business practices


An analysis by the Confederation of British Industry (CBI) underlines the growing importance of sustainability among SMEs. Over 80% of surveyed SMEs express intentions to increase investments in eco-friendly practices. Additionally, a report by YouGov reveals that 65% of UK consumers prefer purchasing from businesses with strong environmental commitments, motivating SMEs to pivot towards sustainability-driven models.


Challenges on the horizon


ONS data outlines persistent challenges faced by SMEs, including labour shortages exacerbated by a mismatch in skill requirements and available talent. A survey conducted by the Federation of Small Businesses (FSB) reports that 45% of SMEs struggled to hire skilled workers in 2023, hinting at potential continued challenges in talent acquisition.


Regulatory complexities post-Brexit are highlighted in a British Chambers of Commerce (BCC) study, indicating that 60% of SMEs faced hurdles in adapting to new trading regulations. Compliance costs and uncertainties surrounding future policy shifts remain focal concerns for SMEs.


Opportunities for growth


According to the Department for International Trade (DIT), the UK government’s commitment to supporting SMEs is evident in increased funding initiatives. In 2023, SMEs received £3.5 billion in grants and loans, with expectations of a further 10% increment in available funding for 2024.


Data from the UK Export Finance (UKEF) indicates a surge in SMEs exploring international markets, with a 30% increase in SMEs leveraging export support services. Furthermore, partnerships with European counterparts continue to thrive, with SMEs fostering alliances to navigate changing trade dynamics post-Brexit. Additionally, UKEF introduced enhanced financing to augment international trade and expand exporting opportunities for small businesses.


Outlook: Navigating 2024 for UK small businesses


The mix of economic predictions, tech shifts and market info give a solid peek into what is up for UK small businesses in 2024. Even with challenges hanging around, there’s a load of chances waiting, asking for smart moves and quick thinking from these businesses. By mixing up innovation, caring for the planet and being ready to change with the times, UK small businesses aren’t just getting by – they are all set to ace the game in the exciting business world of the next year!


If you’re in need of guidance or assistance with forecasting or developing a business strategy, don’t hesitate to contact us.


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