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

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

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

Whole swaths of small businesses across the country are being weighed down by exorbitant costs, soaring utility bills, supply chain delays and delivery issues.

Struggling: Whole swaths of small businesses in the UK are battling rising costs

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-facing businesses such as shops, bars and restaurants.”

Worryingly, a growing number of small businesses reported a decline in revenue over the previous three months, and their outlook for the months ahead remained equally optimistic.

Forty-four percent expect to see a decline in income in the coming months, while only 29% expect it to increase.

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

The proportion of small businesses whose number of employees fell exceeded the number of those who gained staff in the previous three months.

But employment prospects for the next three months were more optimistic, with one in seven small businesses planning to increase their workforce.

Inflation continued to weigh heavily on many small businesses, with nearly two in five saying costs were significantly higher than the same time a year ago.

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

Small businesses hurt by late payments

Additionally, late payments are still holding back a significant number of small businesses, with three in ten small businesses saying their payment situation has deteriorated over the past three months.

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

She wants to make the audit committees of large companies responsible and accountable for supply chain payment practices and see the introduction of a legal requirement that payment terms and conditions must be published in annual reports.

Martin McTague, National Chairman of the FSB, said: “There’s no way to water down these numbers – small business confidence is at its third lowest level since we started tracking it almost ago. ten years.”

“But business owners are resilient and where there is a will we will find a way through.

“Clearly, falling consumer spending, inflation and high energy bills are taking their toll, and the poor post-golden quarter results are particularly disappointing – but this should also be a time to grab the nettle and to be decisive in finding other means for the growth of the economy, which is why we have drawn up an action plan for the government to implement.

“Small businesses are always the engine room of any economic recovery. The quicker small businesses get out of this, the quicker we can all recover.

He added: “Helping more people find jobs, tackling late payments, boosting energy efficiency, boosting R&D and getting more people to start on their own are all initiatives that will make a real difference. for the economy – just as individual small business owners will. continue to demonstrate the ingenuity they have shown during the pandemic to find new markets and new ways of working.

“Small businesses are a fantastic national resource for innovation and creativity, especially if given the right conditions to thrive. These results are incredibly disturbing, yes, but they are not the last word.