The Federation of Small Businesses (FSB) has found that the small business confidence has hit the biggest low since the financial crash in 2011. The small business confidence was measured at -9.9, in their Small Business Index (SBI). The uncertainty that comes from Brexit is taking a toll on small businesses in the UK resulting in them being very unsure of what’s to come.
Weak economic growth, consumer demand and high-interest rates on loans are just some of the reasons cited for this lack of confidence. These are concerning times for small businesses. The biggest issue that is caused by the political uncertainty in the UK is the weak economic growth as cited by 58% of respondents.
The FSB surveyed over a thousand respondents in the final quarter of 2018 and found that around 67% of small businesses do not expect their performance to improve. This is a significantly high number and should be a cause of concern for the small business sector.
Other issues that small businesses owners are flagging as barriers include: access to skilled staff, which was listed by over a third of the respondents (36%). Lack of consumer demand was an issue for 29% of respondents, and labour costs were also an issue for 21% of small businesses.
Mike Cherry, the Chairman of the FSB commented: “How have politicians allowed it to come to this? Two and half years on from the Brexit vote and small businesses are looking ahead to Brexit day with no idea of what environment they’ll be faced within less than ten weeks’ time.
“The current uncertainty is making it impossible for firms to plan, hire and invest. That’s feeding into wider concern about the economy at large. We won’t see GDP growth pick-up again until there’s some certainty about how the business environment will change in the coming months.
“Come the beginning of April, small firms will not only have Brexit day to worry about but also Making Tax Digital, a higher living wage, rising auto-enrolment contributions and further business rates hikes. This will be a flashpoint for a lot of businesses, threatening the futures of many.”
Small businesses are borrowing more to keep up with the costs of running their businesses. The number of successful application for loans at a borrowing rate of 5% has hit a record high at 74%. On the other hand, external finance options are not considered enough by small businesses.
Mike Cherry added: “With Brexit taking up all of the Government’s bandwidth there are a huge number of domestic business issues that are not being addressed. They include the long-standing barriers small firms face when trying to access new finance, and the sky-high borrowing rates they’re often offered if an application is successful.
“This is another issue that will be exacerbated by a chaotic no-deal Brexit. When times are tough, big lenders often put supporting small businesses on hold.”