SMEs are "building up cash mountains"



Despite the lingering economic gloom and low interest rates, something rather marvellous is happening with small and medium-sized enterprises (SMEs) in the UK – they’re making, and saving, cash.


Figures show that at the end of March, SMEs had £125.9 billion on deposit, up from £119.2 billion a year earlier – Anthony Browne, chief executive of the British Bankers’ Association, writes in City AM.


And while this is good news as it highlights the growth of small businesses in tough times, it’s not all fun and games. Indeed, figures also show that many SMEs are choosing to hold their spare cash in the bank rather than investing it straight back into their company.


No doubt this is because of the uncertainty surrounding the economy and view that things could hit a brick wall once again.


“There is an astonishing – but almost unnoticed – thing happening among SMEs, many of them are building up cash mountains. The sector is amassing deposits in banks at a rapid rate, and the smaller businesses are building them up fastest,” Mr Browne says.


Posted by the Secret Businessman