SME manufacturers cite demand uncertainty as top barrier to investment, CBI survey finds

Forty-three per cent of small and medium-sized manufacturers told the CBI that uncertainty about future demand was the main reason they were holding back on investment in July.

The figures, from the CBI’s latest SME Trends survey, show that demand uncertainty was the single most common constraint on investment, cited by 43 per cent of firms. The next most common barriers were a shortage of internal finance and inadequate net returns, each cited by 25 per cent of respondents.

The cost of finance is adding a separate layer of pressure. The survey found 21 per cent of firms cited it as a constraint — the highest figure in three years, and the highest since 1991 outside the pandemic period. Output fell for a fourth successive quarter, even as overall sentiment among SME manufacturers remained broadly stable.

For Kent’s smaller manufacturers and businesses, the picture is likely to mirror the national survey closely. Firms that depend on retained earnings rather than external borrowing may find themselves delaying equipment purchases, expansion plans, or new hires when cash generation is tight and the return on investment looks uncertain.

Borrowing costs bite hardest at the smaller end of the market — and the three-year high on finance-cost concerns suggests that pressure hasn’t eased.