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22 September 2016

Business confidence falls into negative territory for the first time in 4 years

The Federation of Small Businesses (FSB) Q3 Small Business Index (SBI) found business confidence has dropped into negative territory (-2.9) for the first time since 2012. Despite this, the survey found many positive signs of small businesses proving resilient and getting on with the job in hand, in spite of a fragile economic outlook in the longer-term, spurred by political uncertainty caused by the outcome of the EU referendum. Many firms may have ‘priced-in’ the impact of the EU referendum result in advance of the vote, with others now looking for immediate growth opportunities in the wake of the result.

The share of small businesses aspiring to grow over the next 12 months also ticked up this quarter, now at 55 per cent, the highest level since the end of 2015. On the flip side, the share of businesses expecting to downsize, close or hand on the business fell to 11 per cent. This is despite a rise in those who report a weakening of the domestic economy in the future.

Mike Cherry, FSB National Chairman said: “There is no doubt that the political shock of the Brexit result has taken place at a time of weakening business confidence.  For the first time in four years, confidence is in negative territory.  This persistent downward trend in UK business confidence reflects underlying issues that predate the Brexit decision.

"Small firms are resilient and will survive the current fragile economic outlook, but to avoid an economic slowdown this data should be a wake-call for our elected politicians.  he UK small business community seek key domestic policy decisions if we are to grow, to invest, to export and to create jobs. We look to the party conferences and upcoming Autumn Statement to green-light infrastructure projects at local and national level, to simplify the tax system and to help reduce the costs of doing business."

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