UK SMEs in 2014 record fastest growth in 14 years

UK small businesses revenue growth was fastest since 2000, according to Barclays’ Small Business Income Index.

Small businesses enjoyed a more liquid 2014 as cash flowing into the bank accounts of these firms increased at its fastest rate in over 14 years, according to the Barclays Small Business Income Index.

In the year to October of 2014, the Barclays index recorded an eight per cent rise in the value of payments into small businesses’ bank accounts. The data also shows that, since 2000, the index as a whole has risen by 20 per cent.

Cash flow is good indicator of growth

Adam Rowse, head of business banking at Barclays, believes that “increased cash flow is a good indicator that a business is growing.”

“This reflects the strength of cash-flow to the business population and the resources available to them. It is also closely correlated with official measures of economic activity,” he added.

Indeed, it appears that 2013 already showed business activity recovering to levels not seen since the months before the financial crisis, however, 2014 saw businesses pick up the pace and record strong growth, highlighting the burgeoning economic recovery in the UK.

Real estate & construction businesses saw largest income growths

Businesses in the real estate and construction sectors recorded the largest income growth in 2014, which contributed to over one-third of the total small business income growth for the year. It also highlighted that London’s small businesses enjoyed the fastest rate of cash growth, with levels that were much higher than the national average.

The accommodation, education and health sectors also saw decent growth when compared with 2013. Despite the strength seen in these sectors, others have fared less well. The index shows the manufacturing, retailing and IT sectors experienced the lowest levels of revenue growth.

“Technology spending is primarily flowing through larger firms,” said Mr Rowse.

The news comes shortly after the Bank of England’s monthly trends in lending report, that showed corporate lending increasing in November 2014. It seems the access to funding for small firms is finally becoming easier as the report showed small business lending grew by £286 million, the biggest increase since records began in 2011.