Earlier this month is was reported that business confidence was higher in London than anywhere else in the UK, with revenues looking to hike by a substantial average of 44% over the next decade. This economic optimism may explain why small and medium-sized businesses in the country’s capital are also well ahead of their counterparts in holding capital in savings accounts. This revelation follows a study that was commissioned by Hampshire Trust Bank in which 500 SMEs were surveyed.
The research showed that those micro-businesses based in The Big Smoke are holding an excess of half a million pounds in savings and have the largest saving pots across the region. However, SMEs in the West Midlands are leading the list of the UK’s top business savers, holding 73% of firm funds in savings accounts, with London-based companies behind at 59%.
Despite this discrepancy, collectively, small businesses based in London and the West Midlands have significantly larger savings sums than any other region. SMEs in the capital are boasting an average of £539,510 in their business savings accounts, with West Midland companies not too far behind with an average of £394,405. Compared to the national average of £273,305, neither of these figures are looking too shabby.
According to the survey, a substantial 39% of London-based companies feel confident in putting cash away for longer than a year, which again, is higher than a national average of 25%. In contrast to this, SMEs in the North East and East of the country, as well as Yorkshire & Humberside, have the lowest amount in business savings and are placing about half of their total funds into savings pots. Small businesses in Northern Ireland have the lowest percentage of funds in business savings and could therefore potentially be missing out on opportunities to fund growth and better cash flow.
Head of savings at Hampshire Trust Bank, Stuart Hulme said: “There is huge regional variation in the amounts businesses are holding in their current and savings accounts. What’s revealing is that the businesses which have lower overall amounts of money in the North East, East and Yorkshire & Humberside, are putting a significant percentage of the cash they have into savings accounts, indicating these businesses are confidently planning for the future.
“That is why we recently launched our new suite of business savings products. The benefit of making use of these savings accounts is not only the interest rate return you get as a business, but also the knowledge that the money is being lent on to businesses looking to grow, delivering double value and supporting the growth of the UK economy.”