SMEs across the Southeast are battening down the hatches as a result of the pandemic and cutting costs instead of investing in R&D, new research reveals.
A study of more than 120 small and medium-sized businesses in the Southeast, conducted by Southampton-based law firm Moore Barlow, estimates that firms in the region have suffered losses of £745,000 each on average as a result of the Covid-19 pandemic, with more than a third (34%) taking a hit of £5m or more.
As a result, only a third (32%) said they intend to invest in their business over the next 12 months while a third (33%) plan 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 & 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 Southeast 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 Southeast. 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.”