Small business confidence plummets to levels not seen since the pandemic, FSB says

Confidence among UK small business owners has fallen to its lowest level since the second Covid-19 lockdown in the last quarter of last year, the Federation of Small Businesses warned.

The Small Business Index’s overall confidence number in the last quarter of 2022 fell from -36 points in the third quarter to -46 points, marking its lowest reading since the last quarter of 2020, when it was -49 points.

Large swaths of small businesses across the country are suffering from skyrocketing costs, rising energy bills, and supply chain delays and delivery problems.

Small businesses operating in retail or hospitality were among the hardest hit in the last quarter of last year, according to the FSB.

The FSB said: ‘This is particularly troubling during the traditional “golden quarter” for consumer-oriented businesses such as shops, bars and restaurants.’

Worryingly, a growing number of small businesses have reported revenue declines over the past three months, and their outlook for the coming months also remains bleak.

Forty-four percent expect sales to fall in the coming months, while only 29 percent expect them to increase.

Hiring levels are also struggling as small businesses struggle to keep their costs down, the FSB added.

The number of small businesses that saw headcount declines outweighed the number of small businesses that hired staff in the past three months.

But employment prospects for the next three months were more optimistic, with one in seven small businesses expecting more staff.

Inflation continued to take a heavy toll on many small businesses, with nearly two in five claim costs significantly higher than the same period a year ago.

Utility bills, including energy, were cited by more than three in five small businesses as a driver of their cost change.

Small businesses affected by payment delays

Moreover, payment delays continue to hold back a significant number of small businesses, with three in ten small businesses reporting that their payment situation has deteriorated over the past three months.

The FSB said it wants to eliminate the problem of late payments to small businesses once and for all.

It wants to make the audit committees of large companies accountable and accountable for payment practices in the supply chain and introduce a legal obligation to publish payment terms and conditions in annual reports.

Martin McTague, national chairman of the FSB, said: “There is no way to reconcile these numbers – small business confidence is at its third lowest level since we started tracking it almost a decade ago.

‘But entrepreneurs are resilient and where there is a will, we will find a way through.

It is clear that falling consumer spending, inflation and high energy bills are all taking their toll, and the poor results after the gold quarter in particular are disappointing – but this should also be a time to grab the nettle and be decisive to find more ways to help the economy grow, so we have drawn up an action plan for the government to implement.

“Small businesses are always the engine room of any economic recovery. The faster small businesses get through, the faster we can all recover.”

He added: “Getting more people into work, tackling payment arrears, driving energy efficiency, boosting R&D and getting more people into self-employment are all initiatives that will make a real difference to the economy – just as small business owners companies will do that individually. continue to show the ingenuity they have shown during the pandemic to find new markets and new ways of working.

“Small businesses are a fantastic national source of innovation and creativity, especially if they are given the right conditions to thrive. These results are very worrying, yes, but they are not the last word.’