Small businesses are scrapping plans to invest in technology an training due to rising costs and uncertainty.
In 2022 half of small businesses either paused, delayed or cancelled business investment due to the economic conditions.
The proportion of small and medium-sized enterprises (SMEs) expecting to immediately increase investment in the business has dropped from a peak of one in three in the last three months of 2021 to close to cone in five in the second quarter of 2022.
Small business lender Funding Circle polled 550 of its clients for its research, conducted by consultancy Oxford Economics.
A separate poll by Nucleus Commercial Finance, another small business lender, has found that around a quarter of SMEs are delaying planned investment in technology, 14 per cent are delaying investment in staff training, while 16 per cent are shelving any growth ambitions completely.
Even more worryingly, 5 per cent of UK SMEs – equivalent to 275,000 businesses – told Nucleus Commercial Finance they face winding up their businesses this year.
Funding Circle also found that small businesses are hanging onto cash, again due to economic uncertainty, with many still stockpiling reserves built up during the pandemic.
About a third of SMEs held £10,000 or more in credit balances in the third quarter of 2022, up from fewer than one in four before the pandemic and near record highs.