Small business confidence falls to record low, stepping up calls for Brexit deal
Small firms are calling on the government to secure a Brexit deal and come forward with radical policy interventions to arrest a dogged lack of confidence among business owners as new FSB research shows rising costs and uncertainty increasingly taking their toll.
The FSB's SBI confidence measure stood at -8.1 in Q3 2019, down more than six points compared to the same period last year. This marks a fifth consecutive negative reading – a first in the index’s history, the business advocacy group said.
According to its findings, close to two thirds (64 per cent) of the 1,200 business owners surveyed for the research do not expect their performance to improve over the coming three months, while almost half (44 per cent) expect their performance to worsen.
FSB reveled that small business owners continue to put investment plans on hold. Only one in four (26 per cent) are planning to increase investment this quarter – the lowest proportion in five years, while more than one in ten (14 per cent) are planning to actively decrease investment, up two percentage points compared to this time last year.
Those that do business internationally have been particularly hard-hit by uncertainty. Fewer that one in four (24 per cent) report an increase in exports over the past three months, the lowest proportion in five years. Meanwhile, fewer than one in seven (13 per cent) small employers are planning to take on additional staff in the next three months, the lowest proportion since Q4 2017.
“These findings must serve as an urgent wake-up call for policymakers. Even in the aftermath of the financial crash, we didn’t see such a sustained string of negative confidence readings. Three years of political uncertainty and rising costs have stifled output and left small firms unable to plan, invest and grow," said FSB national chairman Mike Cherry.
He explained that there's a real sense of exasperation among small firms, urging the government to seize this final opportunity to secure a Brexit deal.
“We also need to see the Chancellor come forward with an ambitious Budget aimed at reversing the impacts of uncertainty. He must throw lifelines to the small exporters that are especially hamstrung. Direct financial assistance – such as £3,000 Brexit vouchers – to enable access to expertise and support would mark a much-needed step forward.”
The overwhelming majority (93 per cent) of small firms say operating costs are either stable or rising – two thirds (67 per cent) say costs have risen over the past 12 months.
The most frequently cited main causes of this increase are Labour, flagged by 40 per cent of firms, as well as inputs (31 per cent), utilities (29 per cent), fuel (24 per cent) and regulation (23 per cent).