8 July 2016 17:15
FSB: small business confidence at four-year low
Small business confidence in the UK is at its lowest level in four years, according to the Federation of Small Businesses (FSB), evidenced by the largest annual fall in the organisation's Small Business Index (SBI) since the survey began in 2010.
The most recent SBI survey was based on responses from 1,104 members of the FSB Big Voice survey community. They were asked for opinions on key economic indicators including business confidence, employment and wages, exports, productivity, spare capacity, finance and investment.
The SBI found that, for a second consecutive quarter, many small firms were planning to reduce their workforce. Respondents reported that falling profits with increased labour costs and "the overall tax burden" were major causes of rising operating costs.
Just 12.2% of respondents are planning new capital investment in the next 12 months - significantly less than the 31.9% planning the same just one year ago, despite improvements to credit availability and affordability.
Mike Cherry, FSB National Chairman, said:
"Even before the EU referendum result, our members were reporting tough business conditions across the country. While the referendum result has settled the question of UK membership of the EU, there are many questions left unanswered. While these remain, we must take steps to shore up the economy and support UK small businesses.
"We need ministers to take stock and roll back any plans which will make doing business more difficult or costly. This should include ending moves to introduce disruptive digital tax reporting and honouring commitments to expand small business rate relief. The Low Pay Commission should be especially vigilant when recommending next year’s National Living Wage rate, taking extra care to ensure small businesses can sustainably support higher wages at this challenging time.
"For the first time since 2009, the UK economy faces a real chance of a recession. To head this off, we need to do everything we can to support small firms to grow, create jobs and weather the harsh economic headwinds."
The sharpest fall in confidence was in London, which, according to the FSB, “dropped into negative territory for the first time since 2012”. Scotland also showed negative numbers - the second consecutive quarter this has happened. The most optimistic regions were the North East and Yorkshire and Humberside, although an overall drop in confidence was evident even in these areas.