UK small business confidence 'plummets' to its lowest level since the Brexit vote

Theresa May

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LONDON — Optimism among small UK firms has dropped to its lowest level since the aftermath of the EU referendum.

The Federation of Small Businesses' Small Business Index for the third quarter of 2017 dropped to +1 from +15 in Q2, close to the -3 seen immediately after last June's Brexit vote.

FSB chairman Mike Cherry said rising inflation and a slowing economy were mainly responsible.

"Rising inflationary pressure and a weakening domestic economy are the twin drivers of plummeting confidence among small firms and consumers alike," he said.

Small businesses most frequently identified the domestic economy (63%) and consumer demand (35%) as barriers to growth. The retail and entertainment sector reported some of the lowest levels in confidence, sliding to -20% and -30% respectively.

The research was carried out in July and based on a July poll of 1,230 small businesses.

It also found 70% of firms reporting a rise in operating costs compared to the same period last year. Labour costs (42%), tax hikes (21%) and rent (19%) were given as the main causes of the increase.

There was some good news. British exporters — who stand to benefit from a drop in the pound — remain optimistic about their prospects. The proportion reporting an increase in overseas sales hit a three-year high (39%) and a similar proportion (35%) expect export growth to continue over the coming quarter.

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