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Small business confidence dips to 2013 levels

Economic uncertainty and other challenges facing the UK's small businesses have caused a significant drop in business confidence.

A new survey by the Federation of Small Businesses (FSB) has found that small business confidence is at the lowest level since 2013.


This quarter, the FSB's Small Business Index fell to 8.6, the lowest level since the first quarter of 2013 and a significant fall from a high of 41 in Q2 2014. Behind this headline indicator are some other worrying figures for SMEs:

  • The number of businesses expecting to see business performance decline has increased to 34.8%;
  • This quarter represents the first negative quarter for job creation since 2013;
  • A net balance of 18.5% of firms anticipate increasing capital investment over the next 12 months, the lowest net balance since Q2 2013;
  • A net balance of over half (56.8%) of small businesses have been operating below capacity over the past three months, the highest since Q1 2013;
  • Small business confidence has declined in every region of the UK compared with a year ago, especially in London and the East of England;
  • Confidence now stands in negative territory for Scotland and Northern Ireland.


The FSB says the cooling in confidence is partly a result of uncertainty about the strength of the UK and global economy. However, it also found a strong indication that a raft of new challenges facing small businesses - including the National Living Wage (NLW), pensions auto-enrolment and plans to introduce mandatory quarterly digital tax reporting - were contributing to business concerns.


This research has found that the top five concerns for SMEs are: the strength of the domestic economy, weak consumer demand, a shortage of skilled staff, increases to the cost of labour and the burden and complexity of the tax system.


Sandra Dexter, FSB Vice-chairman, said: 

"Small business confidence has clearly faltered, which is why the welcome small business focus in the Budget is so important. We need a renewed push for growth and productivity."

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