The 2022 MYOB Business Monitor survey found that 68% of SMEs in New Zealand believe that the economy will decline in the next 12 months.
More than a quarter are expecting the decline to be significant.
The grim outlook continues with half of SMEs reporting that their business profitability was down last quarter and more than a third expect their revenue to decline over the coming year.
MYOB head of go to market, Jo Tozer, explains that the steep decline in SME confidence follows a perfect storm of conditions.
“If we just look back over the past six months, SMEs have had to navigate a tough second half of 2021, worsening supply chain disruptions and inflationary pressures, and a new COVID-19 outbreak hampering operations and staffing abilities in the first few months of this year,” she says.
The latest results are a continuation of sentiments already shared last October, with 55% of SMEs expecting the economy to decline.
“These latest confidence numbers are even more worrying,” says Tozer.
“With the exception of when COVID-19 initially reached our shores and we entered the first nationwide lockdown in March 2020, this is one of the lowest levels of business confidence we've seen in the history of our Business Monitor survey.
Government performance affecting confidence
The survey also reveals who SMEs believe are to blame for their failing confidence, with 62% pointing to the ongoing impacts of the pandemic, 55% to inflation and half of SMEs pointing the finger at the country's leadership.
Dissatisfaction amongst SMEs around the government's performance is also now at 60%, up from 35% the same time last year.
This kind of sentiment is also spilling over into who local businesses want as their prime minister.
National party leader Christopher Luxon has 42% of SMEs backing him to be the country's next leader, nearly double the number of SMEs backing current Prime Minister Jacinda Ardern.
“While historically our polling has shown National to be seen by SMEs as the political party with the greatest understanding of business, in the lead up to the 2020 general election, we saw a very strong amount of support and satisfaction from SMEs for Labour and its leadership,” explains Tozer.
“There has been a notable change in sentiment both towards the government and the opposition from SMEs over the past six months or more.
The changes SMEs want to see
The survey shows the most popular policy decision SMEs are after is a reduction of the business tax rate.
Other decisions include making no changes to income tax, increased investment in roads and changing the Resource Management Act.
“The cost of doing business is increasing and considering the ongoing challenges they are facing, like supply disruption, rising employee and compliance costs, and skyrocketing inflation, the battle to maintain a steady cash flow could continue for some time,” says Tozer.
“Now, all eyes will be on the upcoming Budget in the hope that it may bring some announcements that offer them a reprieve.
The 2022 MYOB Business Monitor survey is a nationwide survey of over 1,000 SME owners and managers conducted by Kantar. It has been running annually since 2009.