Small and medium-sized businesses in the UK face a “challenging future” as a result of rising inflation, shrinking or stagnating revenues, and a potential increase in business rates, a new report from RSA has said.
Inflation, which is due to hit 2.7% this year, could increase SME costs by £6.8bn, the Economic Imperative report revealed.
Meanwhile, four million UK SMEs expect revenues to shrink or stay the same this year, while business rates are expected to go up.
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While an unpredictable economic backdrop continues to present challenges for businesses both big and small, the pace of change driven by technology is one of the key shifts, said Steve Lewis, CEO for UK and International at RSA, at a launch event for the report in London earlier this week.
Profound change happening as a result of the “tech enabled world,” will present a threat for some businesses and an opportunity for others, he said.
“From an insurer point-of-view, we’ve got to evolve our offering, and we’ve got to evolve our offering in the context of how we deliver in a technology-native world,” Lewis said.
“But what I’d also say is, the risk landscape is evolving at pace, and so our coverages need to change – and I would say that for businesses today, a lot of their key risks are actually risks that were not previously insurable.”
Alongside a falling Sterling since January 2016, which is expected to remain volatile, growth in consumer spending is set to slow in the next two years.
Brexit also adds a level of uncertainty to the environment and needs to be navigated, Lewis said.
Russell White, schemes and deal director, commercial risk solutions at RSA, said in the report that RSA believes that “protecting our small businesses is absolutely central to securing wider economic growth.
“Providing SMEs with the tools and help they need to continue to thrive in adverse conditions should be a top priority for us all,” he added.
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