Good access to finance, a flexible labour market and low levels of bureaucracy for small firms put the UK ahead of leading European economies, according to Euler Hermes.
The UK is providing a better business environment for SMEs to thrive than France or Germany, according to research from Euler Hermes, the world’s leading trade credit insurance provider.
The insurer, which published the SME Business Climate Index (SME-BCI) in its latest report Business Climate: Which country is best in class for SMEs? scored the UK strongly for access to finance, its flexible labour market and low levels of bureaucracy, areas in which France and Germany struggle.
British businesses also have the best opportunities to secure credit in Europe, according to the findings.
The UK was placed seventh overall behind Canada, the US, Singapore, Belgium, the Netherlands and Hong Kong in the analysis of 13 leading economies, with the research citing more competitive tax policies and less complicated exporting processes as the reasons behind their higher ranking.
France and Germany were placed eighth and eleventh respectively.
The UK was placed joint bottom for beneficial tax policies alongside Germany and the Czech Republic. Only Ireland was ranked lower as a favourable market for exporters, according to the findings.
Ana Boata, senior European economist at Euler Hermes, said: “The UK is faring well against its other leading European economies and provides its SMEs with good access to finance, a flexible labour market and a comparably low amount of red tape.
“But it has some work to do to catch up with the likes of Canada, the US and Singapore, where companies face far fewer constraints than British firms.
“Looking ahead, providing a strong platform to export will prove a key factor and while export growth helped the UK avoid recession in Q3, the short-term outlook is not encouraging. We expect the economy to contract by -0.1% in the next two quarters and Brexit has the potential to reduce future opportunities for the union’s SMEs through the introduction of tariffs and an increasing amount of paperwork.”
The SME-BCI assessed 13 economies – Canada, Hong Kong, the US, the Netherlands, Singapore, Belgium, the UK, Germany, Poland, Ireland, France, Slovakia and the Czech Republic – on six components – red tape, tax policy, labour market flexibility, financing, export opportunities and competition.
This study was jointly produced by Euler Hermes Economic Research and Euler Hermes Rating. Established in 2001 and based in Hamburg and Paris, Euler Hermes Rating was the first credit rating agency to be registered under the EU regulation on credit rating agencies. It is specialized in delivering independent credit opinions on SMEs and MidCaps. Moody’s has a 4.99% stake in Euler Hermes Rating GmbH. In June 2017, Euler Hermes Rating launched TRIBRating, a robust assessment of creditworthiness for SME’s developed through the Euler Hermes collaboration with Moody’s Investors Service.