Scottish SMEs savings suffer most following Brexit vote

Small and medium sized enterprises (SMEs) based in Scotland hold an average £220,000 in business savings accounts, according to new research from specialist challenger bank Hampshire Trust Bank.

The national average for business savings is £446,000, a 20 per cent drop compared to last year.

The majority of businesses in Scotland stated the decrease in their business savings pots is due to wanting to invest in the development of their business.

According to the data, only SMEs in the East Midlands have grown their business savings balances since 2016 - increasing their savings pots by 9 per cent to £670,000.

While businesses in the East of England have the largest savings pots, with an average balance of £707,000, those in the North East and South West are the most active savers, investing 69 per cent and 66 per cent of total funds respectively in business savings, higher than the national average of 52 per cent.

Firms in the North West, West Midlands and Wales invest significantly less than the national average in business savings accounts – 41 per cent, 42 per cent and 43 per cent respectively. When asked why they kept money in current accounts, the businesses cited the need to have the money as a readily available source of capital for regular payments (25 per cent, 33 per cent and 43 per cent respectively).

Stuart Hulme, director of Savings at Hampshire Trust Bank, said: “We appreciate that this is a challenging time for UK SMEs, with the current uncertain economic and political environment impacting on savings balances across the UK. However, it is encouraging to see that on average smaller businesses are still investing 52 per cent of total funds in business savings, just 5 per cent less than last year’s figure of 57 per cent.

“Rather than stockpiling cash in current accounts, SMEs should consider shopping around for a business savings account that provides a better rate of return, enabling them to make more of their hard-earned cash.”