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Confidence falls as business costs rise

Seven in 10 (73 per cent) small firms do not expect their performance to improve during the coming months, and one in three (31 per cent) expect it to worsen, according to FSB’s quarterly Small Business Index.

The index stood at -8.8 in the second quarter of 2019, down 22 points compared to the same period in 2018. Such a sustained slump is a first for the index, launched in 2010.

The share of small businesses expecting to grow in the coming three months (45 per cent) is at a record low, with one in three (33 per cent) citing labour costs as a barrier to growth and 63 per cent flagging the UK economy. 

 

Seven in 10 (72 per cent) say business running costs are rising, with 48 per cent citing labour costs as a main cause. Over a third (34 per cent) say regulation is a primary factor. The net balance of small businesses that are increasing headcounts stands at a three-year low (-2 per cent). 

Four in 10 (42 per cent) small firms say profits are down this quarter, and more than a third (34 per cent) of exporters say international sales have dropped off. Both figures are at a record levels.