Economy  

Small business confidence negative for first time since 2012

Small business confidence negative for first time since 2012

UK small business confidence has dipped into negative territory for the first time in 4 years in the first data gathered since the UK’s decision to leave the European Union

The Federation of Small Business Index for the third quarter found the second largest fall in confidence in the index’s history.

Confidence has now fallen for the last three quarters in a row. The largest drop occurred in the second quarter of 2016.

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Despite this, the FSB found many positive signs of small businesses proving resilient.

The share of small businesses aspiring to grow over the next 12 months ticked up this quarter, now at 55 per cent, the highest level since the end of 2015.

By comparison, 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.

Small businesses have started to take on new staff, with a net balance of 7 per cent of small firms report increasing headcount this quarter.

This is the first time that smaller companies reported an increase in hiring this year. Small businesses also expect this positive trend to continue into the final quarter of 2016.

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-up call for our elected politicians.

“The 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."

 

laura.miller@ft.com