Yahoo Finance Confidence among small firms tumbles, but exporters show optimism
Optimism among UK small firms has fallen to its lowest level since the EU referendum, in the face of rising operational costs and a sluggish domestic economy.
New findings from the Federation of Small Businesses' (FSB) quarterly small business confidence index show that one in eight small firms now expect to downsize, hand on or close their business.
Rising costs appear to be to blame: the vast majority, 70pc, of the of the 1,230 small businesses who took part reported that costs have increased since last year with 42pc citing labour, and 21pc taxation, as pain points. Entertainment and retail firms came lowest in the confidence stakes, with their optimism down 30pc and 20pc respectively.
But while overall confidence appears to have taken a hit, small exporters are optimistic. The research found that 39pc of firms are reporting a rise in overseas sales – a three year high – and that nearly as many (35pc) expect exports to continue to grow over the coming quarter.
Jo Smedley, managing director of small retailer Red Herring Games told The Daily Telegraph that while export levels to the US have risen for her firm, by comparison UK sales have been sluggish, despite significant investment in marketing and e-commerce infrastructure. Higher costs in the raw materials needed to manufacture games have also presented challenges for the Grimsby-based firm.
“Small firms will be looking to the Chancellor to extend a lifeline at the Budget. In such a difficult trading environment, any new tax grabs or loss of reliefs for entrepreneurs would exacerbate existing challenges,” said Mike Cherry, FSB national chairman.
Tom Ironside, director of business regulation at the British Retail Consortium (BRC), argued that with signs of a slowing economy and a September Retail Prices Index of at least 4pc – which will push up business rates – a fall in confidence among retailers of all sizes is understandable.
“The prospect of a further investment-sapping tax rise of this magnitude is deeply worrying and will only serve to make life tougher for high streets. Nearly one in every 10 shops currently lies vacant and those in economically-vulnerable communities in particular remain persistently empty, limiting the chances for these places to thrive,” he said.
