Small business confidence grows across UK

Monday 18 January 2016

A new report from the Federation of Small Businesses (FSB) has found that confidence has improved across the UK for small companies. However, it also revealed that there was a significant gap between some areas, indicating that more could be done to support SMEs in these locations.

Overall, confidence in the UK is positive, measuring 21.7 points in the FSB's Small Business Index 2015. This is a significant improvement from 2014 when it was 4.1 points lower in the last quarter.

Despite positive news for British small businesses as a whole, the analysis showed that there was a growing gap in confidence between some areas.

Although the findings from the FSB suggest a good outlook for job creation, increasing revenues and improving productivity for small businesses in the UK, there were some areas that were significantly below the national average in terms of confidence.

Over the past year, smaller companies in the North East, Yorkshire, Scotland and Wales had experience[d] year-on-year decline, with the latter measuring negative confidence for the first time in two years.

However, confidence was stable elsewhere in the country, with industries such as technology and business/professional services bolstering this positive feeling for SMEs.

In the South and Midlands regions particularly, it was a much more positive outlook for smaller firms, suggesting a significant gap between different regions.

There was more good news in terms of revenue growth. According to the FSB findings, this figure was the highest since 2010, measuring 24 per cent over the last three months. The study also showed that more than one in five businesses (22 per cent) still wanted to invest in capital, suggesting that they were expecting a positive year for growth.

John Allan, national chairman of the FSB, said smaller companies would need more support in the next year, especially those who have not fared so well in the latest analysis.

He said: "Smaller businesses need time to adapt to incoming requirements, such as the national living wage, pension auto enrolment, and the tax treatment of dividends.

"The 2016 Budget needs to reduce, not introduce, burdens on businesses. The focus should be on driving the delivery of existing reforms and developing a simpler tax system along with a business rates system that is fair, transparent and flexible."

There was also good news for small businesses across the UK in terms of getting access to finance.

The analysis from FSB found that, although fewer firms are applying for finance, the levels of acceptance are growing and average interest rates are falling.

It also revealed that nearly two-thirds (59 per cent) of businesses expecting to grow remained stable, with almost one in four (24 per cent) measuring growth in revenue in the last three months, the highest since 2010.

By Victoria McDonnell

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