44% of the UK’s SMEs, equating to 2.5m businesses, are struggling with cashflow as they attempt to prepare for Brexit, according to the latest SME Confidence Tracker from Bibby Financial Services.

The report, which surveys  one  thousand business decision makers on a quarterly basis from across the UK, found that  there has been a 6% rise (to 29%) in the number of SMEs actively using funding in the past quarter. 72% of SMEs are investing an average of £16,400 more than predicted at the end of Q1.

According to economic analyses from the PMIs and ONS, it appears that this additional investment is being used to offset risks associated with a no-deal Brexit.

69% of SMEs are preparing to further invest in their businesses in Q3 as they attempt to protect themselves from any negative impacts of Brexit. Bibby said that while this does mark the end of five quarters of falling investment, it is not a return to  historic levels last seen in Q4 2017 (80%).

With half of the UK’s SMEs believing there will be a recession this year, they’ve turned to quick-fix forms of funding, with 26% of those needing finance making use of credit cards, bank overdrafts, and borrowing from family and friends.

Sharon Wiltshire,  UK commercial director  at Bibby Financial Services, said : “Ordinarily a rise in the number of companies investing in themselves would be a boon for the economy. But with increasing competition, rising materials costs and the broader economy stalling, businesses appear to be sourcing finance to cope with these challenging conditions rather than investing for growth.”