In the most recent Small Business Index carried out for the third quarter (Q3) of 2018, it was found that small businesses are lacking confidence. The research carried out by the Federation of Small Businesses (FSB) on a quarterly basis has seen the confidence of small business plummet for the third time since the Brexit vote. The confidence of the self-employed has also taken a big hit due to the government unfulfilling its promises.
Both small businesses and the self-employed are currently very pessimistic about the future of their business. Less than one third (29%) of small businesses expect their business performance will increase. This is due to the uncertainty that looms due to the ongoing unpredictable Brexit negotiations. The confidence of small businesses is measured at -1.7, which is down from +12.9 in the previous quarter (Q2 2018).
Businesses that export are really struggling. Just under one in three (27%) of small businesses that export have seen their international sales fall this quarter. This is up from only 19% in the same period last year. It’s also worrying that around 21% of these small firms expect this fall in sales to continue.
Mike Cherry, the chairman of FSB commented: “We haven’t seen a string of negative confidence readings like this since the years immediately after 2009. Small firms need some Brexit clarity before Christmas. Ultimately, we want to see a deal that works for all businesses – with easy cross-border trade, access to skills and funding streams all protected. The number one priority is ensuring the transition period that we’ve fought for is nailed down by the end of this year.
“If we reach the Budget and things are still up in the air, we’ll be looking for additional financial support for smaller businesses as they prepare for life after March 2019. It’s worrying to see small exporters already reporting a drop in overseas sales over the last quarter.
The picture is even bleaker when it comes to the self-employed in the UK. The index ranked the confidence of the self-employed at -18.4. This is an all-time low for the group. The government only recently revealed that they will carry on taking Class 2 National Insurance Contributions. This was a surprise as they had promised to abolish them. This move expects to cost the self-employed around £1 billion in the upcoming three years.
Mike Cherry added: “Confidence among the 4.8 million-strong self-employed community has plummeted. This Government needs to do some soul searching – a broken promise on Class II NICs, failure to take full responsibility for delivering a pensions dashboard and threats to the New Enterprise Allowance all have the self-employed once again questioning whether this administration is on their side.
“The upcoming Budget is a decisive moment for this Government. Does it want to be remembered as an administration that backed sole traders, or one that was content to stifle their ambitions? That’s the question that Ministers should asking themselves in the weeks ahead.”
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