Confidence Amongst SMEs Increasing

Findings from the latest Federation of Small Business (FSB) Small Business Index indicate a rise in the overall confidence level of small businesses in the UK.

Report Highlights

• More than seven in ten firms expect their performance will either improve (32%) or remain the same (40%) over the next three months, while only one in four (27%) lack confidence about the coming quarter.
• More than two-thirds of firms (67%) reported that revenues are either stable or increasing.
• The proportion of firms planning to increase investment has hit a two-year high (33%).  
• Half (50%) of small businesses expect to expand operations over the coming 12 months.
• Small firms are continuing to hire. The proportion reporting a steady or increased headcount is at its highest since summer 2016 (82%).

Although the overall picture is positive there are some stark variation between sectors.  At one end of scale retail reported a fall to -19% and accommodation and food services -25%.  Whilst at the other end, manufacturers were +33% and professional services & scientific firms +14%. 

International traders remain bullish, with the share of small exporters expecting global sales to increase over the coming three months at a one-year high (42%).

The report found that the domestic economy remains the biggest barrier to small business growth, with more than half (55%) of firms raising it as an issue. Consumer demand (33%), the regulatory burden (28%) and labour costs (21%) are the other most frequently flagged barriers to growth among small firms.

Mike Cherry, FSB National Chairman, said: “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.

”The picture is mixed though – consumer-facing firms are still trying to keep their heads above water after a year of customer belt-tightening and business rates hikes. As a labour-intensive industry, small firms in the retail sector will disproportionately feel the impacts of a rise in the national living wage and auto-enrolment contributions next month.”

“As Brexit negotiations progress, the Government needs to remember that it’s economic growth, consumer demand and labour costs here at home that are on the minds of small business owners day to day.”