Business confidence shows no sign of improving from the latest FSB survey of small businesses in the South East. From -28 in quarter 3 of 2022, the year ended in quarter 4 with business confidence dropping to -39. This level is the lowest seen since the -147 score recorded at the beginning of lockdown in 2020. These are the most difficult times small businesses face. Having fought their way out of lockdown a new set of long-term challenges face all SMEs.
Depressingly, there was no Christmas bounce that FSB members reported at the beginning of 2022. Revenue for the last quarter was down, with a net score of -12%, a decrease from -10% in the third quarter of 2022. 29% of businesses reported an increase in revenue, compared to 41% that reported a decrease. Looking ahead to the next quarter, SMEs predict a further fall, anticipating an 18% drop in revenue for the first quarter of 2023.
Employment levels have continued to fall in the South East, with a widening gulf between those taking on new staff and those reducing staff numbers. Only 7% reported an increase in staff numbers, with 17% reducing staff. This is well below the predictions of the last quarter, where businesses anticipated an 18% increase in recruitment. In a wider context, however, over 70% of businesses plan to stay at current staffing levels. Over half (55%) increased wages by 2% or more in the last twelve months. This, however, is a slowing trend. Previous quarters have shown a net increase at the two-thirds level. Wages have also not risen as fast as SMEs have predicted.
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South East Small Business Index Q4 Report 2022