- Quarterly Federation of Small Businesses (FSB) Small Business Index (SBI) posts highest reading since autumn 2014
- Majority of firms forecast increase in revenues and aspire to grow
- UK’s largest business group calls for cuts to hiring costs amid redundancy fears, renewed efforts to tackle late payments and innovative approaches to debt
Close to two thirds (58%) of small businesses expect their performance to improve this quarter, and fewer than one in three (31%) expect theirs will worsen, according to the latest FSB study of almost 1,700 business owners.
With trading restrictions easing across England and Wales today, the business group reports that its UK SBI confidence measure has risen to +27.3 in Q1 of this year, up from -49.3 last quarter. The index is at its highest level since Q3 2014, when it hit +41.0, and is in positive territory for the first time since Q2 2018.
More than half (51%) of those surveyed for the SBI expect their revenues to increase over the coming three months, the highest proportion since the summer of 2015. Fewer than one in four (24%) expect sales to fall – the same figure stood at 84% at this time last year.
The majority (53%) aspire to grow their firms over the next 12 months, the highest share since Q3 2019, marking a 22 percentage point jump compared to the same period last year.
With the job retention scheme starting to wind down over the coming months, one in seven (14%) small firms with staff say they are likely to make some or all of their team redundant this quarter.
FSB National Chairman Mike Cherry said: “It’s fantastic that our shops, hairdressers and gyms can get back to doing what they do best all over England from today, with some restrictions easing in other parts of the UK as well.
“The certainty provided by the Government’s road-map is filling many small business owners with renewed confidence. We live in hope that the virus stays in retreat so the remaining indicative dates for unlocking can be met, enabling our vital night time economies, offices and travel and tourism businesses to get back to it as well.
“It’s worrying to see such a sizeable proportion of employers fearing redundancies over the coming months. Initiatives like Kickstart, as well as incentives to take on apprentices and trainees, need to be delivered efficiently over the coming months to protect against a job market shock and support the young people that have disproportionately borne the brunt of rising unemployment.
“Policymakers also need to look at measures to encourage hiring activity. Bringing down the non-wage costs of employment, starting with employer national insurance contributions, which essentially serve as a jobs tax, would certainly help.
“With emergency loan repayments now starting to bite, the Government should carefully consider routes to realising economic value from the facilities it has underwritten: an approach to repayment based on the student loan model and greater adoption of employee ownership trusts could both mark constructive ways forward.
“Lockdowns have caused our £23bn late payment crisis to deepen. As confidence returns, now is the time to bring forward reforms that will help audit committees gain full visibility of payment practices.
“As the economy shifts, support measures need to evolve – particularly where support for start-ups is concerned. The Help to Grow initiative should be urgently reformed in order to both widen its support remit and make it open to all small business owners as they start out, not just those that already have staff.”
Notes to Editors
1) FSB surveyed 1,684 small firms for the Q1 2021 SBI between 8 and 22 March 2021. Statistics are based on a weighted analysis of survey results. Weighting is applied to ensure figures are representative of the UK’s business population.
2) The SBI survey covers a range of economic indicators including: small business confidence, employment and wages, exports, productivity, spare capacity, finance and investment. The SBI is conducted by independent research company Verve. The headline SBI confidence figures are based on a weighted index, with the share of firms reporting ‘much improved’ or ‘much worse’ confidence allocated double weighting.
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As the UK’s largest business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed.
FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.