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Rising Costs Help Put Small Business Confidence on the Slide

Written by: Keith Tully

Reviewed: Wednesday 20th September, 2017

Confidence among the UK’s small businesses has slumped to the lowest levels recorded since the immediate aftermath of the 2016 Brexit referendum.

According to the Federation of Small Businesses (FSB) and its Small Business Index (SBI) optimism among small firms nationwide plummeted from a figure of +15 in the second quarter of this year to +1 for the third quarter 

Meanwhile, as many as one in eight small businesses now expect to downsize, move on or close down their operations altogether, which at 13 per cent is the highest proportion ever recorded by the FSB’s index.

One obvious reason for the downturn in small business optimism is rising costs, which 70 per cent of companies have reported experiencing on a comparative basis between 2016 and 2017.

Many small businesses are also worried about how problems with the UK’s domestic economy and a wilting of consumer demand will impact their operations and their profit-making capabilities in the months to come.

Retailers and businesses involved in entertainment industries were found by the FSB’s SBI to be among the small firms with the lowest levels of optimism during the third quarter of this year.

“Rising inflationary pressure and a weakening domestic economy are the twin drivers of plummeting confidence among small firms and consumers alike,” said Mike Cherry, the FSB’s national chairman.

“With conference season and the Autumn Budget approaching, policymakers have an opportunity to restore optimism.”

While positivity is apparently in short supply among most small businesses, those whose focus is primarily on exporting goods were among those most likely to be optimistic about their prospects, according to the latest figures on the subject.

Around 35 per cent of small businesses involved in exports expect that their export sales will increase in the final quarter of 2017 and a three-year high of 39 per cent recently reported an increase in the scale of their overseas sales.

“It’s encouraging to see that small firms which export are still bullish about the future,” said Cherry from the FSB. “While growthfalters here in the UK, it’s accelerating across the Eurozone and US.”

Keith Tully

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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