According to the latest report by the FSB (Federation of Small Business), confidence among small businesses is bouncing back after the dismal results of the last quarter. These positive results from the quarterly index could be due to the progress in Brexit talks, lower inflation and the positive spring statement.
The Small Business Index (SBI), measured quarterly, revealed that Q4 of 2017 was one of lowest confidence quarters in the history of the Index being carried out. The quarter went into negative numbers and small business confidence was measured at -2.5. However, the first quarter of 2018 has shown great results and small business confidence has been measured at +6.
The results from the SBI showed that over seven in ten firms expected their performance to improve in the near future, and 40% reported that they expect the performance of their small business to remain the same. Under a third displayed a lack of confidence about the upcoming quarter. Overall a positive result for the small business sector.
Mike Cherry, FSB National Chairman, commented: “After a 2017 dogged by spiralling prices and political uncertainty, it’s good to see small business confidence back in the black. The resilience of the small firms and self-employed entrepreneurs that make up 99 per cent of UK businesses has lifted economic forecasts for the coming 12 months.”
“We’ve campaigned for an end to the £14 billion late payment crisis, reform of the regressive business rates system and an overhaul of VAT, so it was good to see the Chancellor address these challenges at the Autumn Budget and Spring Statement. Positive commitments from the Chancellor, along with agreement on a Brexit transition period and falling inflation, should make it easier for small business to plan, invest and grow in the months ahead.”
The confidence across industries varies. For example, manufacturers, professional services and scientific firms have shown the most confidence. The measured confidence for manufacturers was +33, and the professional service and scientific firms measured at +14. On the other hand, there were some negative numbers for certain industries, such as retail, accommodation and food services.
The consumer-facing small businesses are the ones that seem to be struggling with their confidence about their future. The main reasons for this could be the business rate hikes, and customers being hesitant to spend. This shows that across the small business sector there are mixed levels of confidence.
Although the confidence of small businesses is mixed, the small business sector is still boosting employment. The number of small businesses reporting a steady or a increasing number of employees was 82%. This is positive for the UK economy and the employment rate, and further proves the importance of the small business sector in the UK economy.
Mike Cherry also added: “Small businesses continue to help keep the nation’s employment levels close to record highs. We need to see more support around managing the costs associated with making that a reality. It’s time for the Government to deliver on the promise of a national insurance holiday for small firms that take on those furthest from the labour market.”
“Securing the right Brexit deal is vital. While the final withdrawal agreement is ironed out, small firms will need support to adjust to regulatory changes over the coming weeks and months, not least the new GDPR rules taking effect from May.”