Easynet Connect, one of the leading ISPs for small and medium sized enterprises, has warned that whilst the £81bn public sector spending cuts outlined in the Comprehensive Spending Review (CSR) could reduce the output of SMEs by £21.7bn per year and lead to 288,500 job losses, the SME sector is the best equipped to drive the economic recovery.
With small and medium sized businesses accounting for 49% of all private sector output and 59.8% of private sector employment in 2009 according to statistics from the Department for Business Innovation and Skills, Easynet Connect believes that smaller companies are in a better position to drive growth than larger businesses and corporations, as long as a positive business environment is protected..
Andy Sumner, Sales and Marketing Director, Easynet Connect said of the impact of the CSR on SMEs: “Based upon previous predictions by PricewaterHouse Cooper’s, the £81 billion public spending cuts could have an overall £21.7 billion per annum impact on SMEs, creating a major threat to many small businesses across the UK. However, many small businesses will be better prepared than their larger peers and competitors to deal with the cuts as they are more agile and able to respond to change. The SMEs that we work with across the country accept cuts as a necessary evil, but they also know the right businesses environment needs to be in place, whether this is access to credit, professional support networks or national web infrastructure.”
Research conducted by Easynet Connect in April showed that SMEs were already cautious about the economy before the severity of the planned cuts were announced, with 58% not expecting growth to return to the economy for another 1-2 years and 28% awaiting the results of the general election before creating growth plans. Notably, 79% of small businesses believed the Internet was driving a faster recovery than previous recessions with 81% claiming they could not cope for longer than 24 hours without reliable Internet access, showing the clear benefits of reliable web infrastructure.2
Sumner continued; “Small businesses have an advantage because they are well positioned to respond to new opportunities. In fact, one in five SMEs were already planning to expand into new areas before the result of the election was announced in April and we envisage this will be the case again as the impacts of the cuts become clear. During the recession, SMEs gained first hand experience of taking on their larger rivals, delivering cost-savings using the latest online tools, from web conferencing to online ‘cloud’ software and driving business through tools like e-commerce. As the UK leans on the private sector in tackling the debt crisis, we expect SMEs will be relying on their Internet connections more than ever.”
With major business leaders backing the Chancellor’s cuts and private sector companies expected to create 2.5 million new jobs,3 the latest research from the Chartered Institute of Management has shown that confidence is higher amongst SMEs than larger companies with more than 250 employees.