FSB: UK small business confidence bounces back
12 Jan 2017
According to the Federation of Small Businesses’ (FSB) Small Business Index, small business confidence in the UK returned to pre-referendum levels in the last quarter of 2016.
The headline confidence measure now stands at +8.5, up from -2.9 in the previous quarter, almost the same level as at the start of 2016 (+8.6).
A net balance of 56.6 per cent of small businesses did however report an increase in their overall cost of operation during the past three months, compared with the same period a year ago. This is the highest net balance since the first quarter of 2014.
Whilst the weakness of sterling is cited as a key contributor to the rising costs, it also appears to be supporting exports. A positive net balance of small businesses reported export growth in the fourth quarter of 2016 and a net balance of 18.6 per cent of small businesses expect exports to grow over the next three months.
Small businesses also reported that credit availability and affordability have worsened in the final quarter of 2016.
Mike Cherry, National Chairman at the Federation of Small Businesses, comments: “We are delighted to see confidence bounce back at the end of 2016, effectively wiping out the fall we saw over the course of the year in the run-up to the EU referendum and its immediate fallout. The current economic outlook seems brighter, and UK small businesses are ambitious and want to make the most of it. Small exporters continue their strong rise, as UK goods and services become more competitive overseas and small businesses go out to find new markets and new customers.”
Mr Cherry does however say that despite the overall positive picture, with rising costs squeezing margins even further, businesses still face many challenges: "The falling pound is driving up the price of imports and rising oil prices are being reflected in higher fuel costs. These inflationary pressures and price competition are hitting the bottom line hard with the majority of small firms seeing their profits continue to fall.”
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