SMALL and medium sized businesses are battening down the hatches as a result of the pandemic and cutting costs instead of investing in research and development, a survey has suggested.
The findings have prompted warnings of an “innovation crisis” as government efforts fail to boost investment in research.
A study of more than 120 SMEs in the south east, conducted by Southampton-based law firm Moore Barlow, estimates that firms in the region have suffered losses averaging £745,000 each as a result of Covid-19.
More than a third took a hit of £5million or more.
- Lidl wants to build six new stores in Southampton - here's where
As a result, only 32 per cent said they intend to invest in their business over the next 12 months, while a third planned to implement cost savings, including spending less on materials, reigning in employee benefits and asking workers to take salary reductions.
Dorothy Agnew, partner in the commercial and technology team at Moore Barlow, said: “The pandemic drove more people to seek work and living space outside of the capital at record speed.
“There is clearly potential for SMEs across towns and cities in the south east to develop and grow, yet without the adequate investment in talent to drive new research and development opportunities we face an innovation crisis across the region.
“The government support on the table currently, such as R&D tax relief, is clearly not having the desired effect in the south east.
“In order to encourage innovation in our regions, we must see policy makers put together a plan for additional funding to help growing SMEs with R&D and accelerate appetite for innovation among the region’s business community.”
Moore Barlow specialises in supporting entrepreneurs, fast-growth SMEs and businesses looking to scale up.
It has offices in Southampton, Lymington, Woking and Guildford, as well as two in London.
Its research was carried out among 120 business leaders in the south east, including London.
R&D tax credits return between 10.53 per cent and 33.35 per cent of qualifying R&D expenditure. This involves using skilled employees such as engineers and scientists to create or modify product, services or processes.
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here