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Business Sentiment Index – optimism dips as inflation and cost rises bite

After rebounding strongly to record levels in in 2021, the Close Brothers Asset Finance Business Sentiment Index* (BSI) has fallen across all key sectors in the early part of 2022.


The key causes given are, unsurprisingly, the rise in both inflation and the consequent uplift in the costs of doing business, including fuel and energy.

The other primary growth inhibitors were listed – in order - as:

Four in 10 respondents have chosen to pass the full cost increases onto customers while a further 24% have done so ‘partially’; 36% have chosen instead to absorb the cost increases.

How the sectors have fared

Some sectors are more exposed to cost rises and shortages than others, which is reflected in the scale of the fall in the BSI score, with the most significant falls in sentiment observed in the Transport and Haulage and Services sectors.

Appetite for investment

Overall, firms’ appetite to invest remained relatively solid, but still fell across all sectors and are more in line with results from April 2021. 

Despite the fall, figures are still very positive, notably in Engineering and Manufacturing where there is clear ambition.

Q: Does your business plan to seek funding for business investment in the next 12 months?

Missed opportunities

Once again, over a third (36.9%) of companies surveyed (UK average) have missed a business opportunity because of a lack of available finance. Many businesses now require additional finance to enable them to invest in growth and continue their recovery.

Q: Have you missed a business opportunity in the last 12 months, due to lack of available finance?

A government report recently stated that a shortage of credit for SMEs is one of the causes preventing the UK from ‘levelling up’. With offices across the UK, Close Brothers Asset Finance has customers in all regions and is actively working to help business owners secure the funds they need to grow.

Economic outlook

Positivity about the economic outlook is the one indicator that improved since the last BSI with around 40% of UK SMEs expecting the economy to continue growing while a further third anticipate a ‘slow path to prosperity’.

Only 8% don’t feel the UK has experienced any economic growth while a further 5% think the economy is declining.

Predicted business performance

Firms are, in the main, still positive about their business performance for the remainder of 2022 with 36% expecting to grow and 52% anticipating things to ‘stay the same’ into 2022.

One in ten think they’ll contract and a further 2% will be shutting their doors permanently.

Score calculation*

The BSI is based on the views of 900 business owners and senior members of the UK’s business community and calculated from data charting their:

  • Appetite for investment in their business in the coming 12 months
  • Access to finance and whether they’ve missed a business opportunity through lack of available finance
  • Views about the UK’s economic outlook
  • Thoughts on their likely performance in the coming 12 months