In just three months the number of UK SMEs reporting worsened mental health conditions has more than doubled, from 13% in March to 35% in June, according to a new poll from the ACCA (the Association of Chartered Certified Accountants) and The Corporate Finance Network (CFN). In fact, the mental health outlook of UK SMEs is dire, with data showing they are experiencing similar levels of distress to that experienced during the peak of the pandemic. In November 2020, 36% of SMEs reported feeling more anxious and stressed than usual, just 3% higher than June 2022 figures at 33%.
The monthly SME Tracker survey, which polls accountancy professionals on the financial outlook of their SMEs clients, shows SMEs are at breaking point once again amidst ongoing financial pressures including economic uncertainty, skills shortages and funding fears. SMEs have fought continuously for their survival, with the pressure set to increase further as a result of the current SME government loan scheme (RLS) that came to an end on Thursday 30th June. This will leave SMEs in the lurch, with nowhere to turn due to a gap in provisional support.
SME Mental Health Crisis returns to pandemic levels
The ongoing dire economic outlook and prolonged uncertainty has had a significant impact on wellbeing and mental health, with the new survey painting an extremely bleak picture for the UK’s SMEs, with a third (33%) feeling more stressed and anxious than usual, almost a fifth (19%) feeling unable to cope and 34% experiencing difficulty sleeping. This shows a significant shift in the wellbeing of the UK’s SMEs. The mental health crisis is felt across the whole of the UK, with Scotland also recording higher than usual figures, with over a fifth (21%) experiencing worsened mental health conditions and a staggering 44% feeling they are unable to cope, compared to three months ago when 23% were experiencing worsened mental health conditions and 27% felt they were unable to cope.
It’s clear the economic circumstances and continued uncertainty has taken a severe toll on SME mental health which has not improved since November 2020 which saw SMEs struggling to cope during the pandemic.
Lack of staff contributes to stress cycle
The data also reveals one of the attributing factors to the stress UK SMEs are experiencing – finding the right skilled staff; with half (50%) of UK SMEs expressing that skills’ shortages are affecting their capacity to provide a more comprehensive advisory service to clients and communities alike. The skills’ shortage is even more noticeable in Scotland, with 83% of Scottish respondents blaming this issue for detrimentally affecting their capacity to deliver services.
As a result of the current economic situation, accounting firms have identified the need to offer new services, with 43% agreeing that demand from clients for a more comprehensive advisory service has grown in light of current economic challenges. However, like other businesses, accountancy firms don’t have the necessary staffing levels to cope with this level of demand and are struggling to recruit professional staff with the required experience.
This, in turn, limits the ability of those professional advisers to support owner-managed businesses through this period and is contributing to the heightened mental health problems faced by UK SMEs at this time. This is particularly concerning as resilience may be of critical importance to the survival of many SMEs across the UK.
Glenn Collins, Head of ACCA UK, commented on the findings, “Once again we’re seeing a very concerning outlook regarding the current state of mental health of UK SMEs. And it’s unsuprising considering the constant strain SMEs have experienced over the past few years. We need to eliminate rather than create uncertainty to support our SMEs. Unfortunately there is currently no clear support plan to replace the end of the recovery loan scheme in June, and this will inevitably only impact the wellbeing of small businesses even further. SMEs will essentially be left in the lurch – to weather the economic storm of the next few months until we receive greater clarity on support. I’m really concerned about the plummeting mental health amongst those that are the backbone of the UK economy. The government urgently needs to do more to support SME businesses.”
Kirsty McGregor, founder of The Corporate Finance Network, adds, “As our research suggests, not only are UK SMEs experiencing a mental health crisis but they’re also really suffering as a result of the skills’ shortage. It’s particularly alarming to see half of UK SMEs identifying recruiting the right skills as a hiderence to meeting demand as it’s a missed opportunity for growth and is only contributing further to the stress cycle. The government has to put a plan in place urgently to counteract some of the immense challenges faced by SMEs in light of the economic downturn. The British Business Bank should have learnt from past experiences and have a replacement support scheme for the lapsed Recovery Loan Scheme ready to launch. Instead, discussions are still continuing, which is unacceptable when SMEs are struggling just as much as they were in the midst of the pandemic. Lessons clearly were not learned from what we went through two years ago with the stuttering launch of CBILS and eventually the Bounce Back Loans.”
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