UK SMEs outperform Q2 expectations, and are cautiously optimistic for Q3 revenue rebound

• SMEs reported, on average, a 14 per cent decline in revenue in Q2 compared to Q1; 50 per cent less severe than the 28 per cent drop predicted
• Optimism has jumped 16 points, showing that businesses are feeling more positive about the future
• Barclaycard Payments data for the first half of Q3 shows the average daily value of SME transactions is up 60 per cent compared to the daily average for Q2
• SMEs are preparing for recovery, with four in five planning to invest over the next 12 months – up from two thirds last quarter

Barclaycard Payments’ quarterly SME Barometer reveals small and medium businesses have exceeded their revenue predictions for Q2. At the start of April, SMEs predicted a 28 per cent decline for the quarter, but now that Q2 is in the books, the research reveals that on average they reported a loss of 14 per cent, which is 50 per cent less severe than predicted.

Stronger-than-expected Q2 performance has led to a boost in optimism, with index scores jumping from 79 out of a possible 200 points at the start of Q2, to 95 points at the start of Q3. This is also reflected in business outlook – 36 per cent of SMEs share a positive outlook for their own business this quarter, up 15 per cent versus Q2. Across all sectors, SMEs predict a five per cent increase in revenue for Q3 compared to Q2, which grows to 14 per cent over the next 12 months.

Sectors that rely on consumer card payments, such as hospitality and leisure, were hit particularly hard in Q2, and many were not able to re-open until the start of Q3. Fortunately, initial data shows that these sectors are recovering well – Barclaycard SME transaction data for the first half of Q3 has shown consistent week-on-week growth, and the average daily transaction value has risen by 60 per cent compared to the daily average for Q2*. However, card transactions for the first half of Q3 remain 13 per cent behind the same point last year*, indicating that card-taking SMEs have a way to go to match pre-pandemic performance.

The percentage of SMEs reporting that coronavirus has negatively impacted their business has dropped this quarter, falling from 82 per cent in Q2 to 74 per cent. While the pandemic continues to cause disruption, with 60 per cent of SMEs expecting it to have a significant impact until at least the end of September, the future looks more positive – that number drops to just 13 per cent by this time next year.

SMEs are also proactive in their own recovery – 80 per cent plan to invest over the next 12 months, with new equipment & technology (32 per cent) and marketing (28 per cent) being the greatest areas of focus.

Rob Cameron, CEO, Barclays Payments, says, “SMEs are once again proving their resilience and reaffirming their role at the heart of the UK economy, especially in the face of the challenges posed by coronavirus. Despite uncertainty and business disruption, SMEs are outperforming their own revenue expectations and beginning to look to the future by returning to work and thinking about investment.

“We welcome these signs of growth and optimism – and hope that SMEs continue to take advantage of the support available, whether from finance partners or the Government, to continue this recovery.”

The return to ‘normal’ for SME employees

The biggest change SMEs have implemented to mitigate the effects of coronavirus is reducing staff numbers (26 per cent), which rises to 47 per cent amongst medium businesses.

The top benefit of coronavirus reported by SMEs was also related to staffing – with a third (33 per cent) welcoming the opportunity to improve remote working capabilities.

Many SMEs can see life returning to how it was before coronavirus, with 42 per cent expecting a return to ‘normal’ at some point, and 31 per cent saying they have made small changes and improvements that they intend to keep, and will not return to normal as it was before.

Similarly, many SMEs have already started to return to their offices, with 21 per cent reporting that employees worked on the premises throughout lockdown, while 22 per cent began encouraging a safe return to work with the easing of Government restrictions in July. Just over one in ten (11 per cent) SMEs have revealed they will be moving to a permanent working-from-home model and not asking employees to return to the office.

Emma Jones, founder of Enterprise Nation, says, “We’ve seen SMEs begin to emerge from lockdown in a place of strength – a huge testament to their resilience and their willingness to seek and take advice. It’s heartening to know that the Government support measures and resources have helped our nation’s small businesses during the pandemic.

“At Enterprise Nation, we’ve offered different types of support for SMEs at various stages of their journey, such as our Make a Plan diagnostic tool. We are hopeful that SMEs will continue to push through these challenging times and keep playing a role as the heart of the UK economy.”

Notes to editors

*calculated using SME transaction data from Barclaycard’s payments processing systems (e.g. Barclaycard card machines in stores), at of close of business Thursday 13th August.

About the Barometer and index score breakdown

To measure SME sentiment, Barclaycard and YouGov aggregated SMEs’ viewpoints on ten key topics to create an overall index score out of 200, with anything over 100 indicating a positive outlook, while anything under 100 is negative. The breakdown of key topics is below.

Micro businesses are defined as any business with a turnover of under £2m. Small businesses are those between £2m – £10m. Medium-sized businesses are £10m - £25m.

Barclays’ Support for SMEs

• Barclays has facilitated a total of £22.43 billion into the economy through the following schemes (as of close of business Sunday 9th August / Monday 10th August):
  BBLS
• Approved – 259,620 / Value -  £8.08 billion
  CBILS
• Approved –  9,002 / Value – £2.06 billion
  CLBILS
• Approved – 89 / Value – £590 million
   CCFF
• We’ve facilitated £11.7 billion of commercial paper issuance for clients, representing 48% of total funding under the scheme [48% of total BoE CCFF funding as of 5th August]

Barclaycard is also offering existing small business credit card customers 0 per cent on all new purchases until the 8th October, to help them better manage cash flow as they get back to business.

For more information, please contact:

Barclaycard:
Oliver Stevenson, Media Relations, +44 (0) 207 116 3837, oliver.stevenson@barclaycard.co.uk

About the data

Research was conducted online by YouGov on behalf of Barclaycard Payments between 21 July – 10 August 2020. YouGov polled 577 senior members of staff working in UK SMEs, weighted by region to reflect SME distribution in the UK.

This data has been compared to Barometer data, conducted online by YouGov between 1 – 21 April 2020. YouGov polled 576 senior members of staff working in UK SMEs.

About Barclaycard

Barclaycard, part of Barclays Bank PLC, is a leading global payment business that helps consumers, retailers and businesses to make and take payments flexibly, and to access short-term credit. In the UK we process nearly £1 in every £3 spent using credit and debit cards, and in 2019 we processed over £272bn in transactions globally. We also partner with a wide range of organisations across the globe to offer their customers or members payment options and credit.

home.barclaycard

Follow us on Twitter @BarclaycardNews