Fall in small business confidence

More small and medium-sized businesses have negative attitudes about future business plans than positive for the first time in four years.

In the first data gathered since the UK’s decision to leave the EU, the Federation of Small Businesses (FSB) has found that UK small business confidence has dipped into negative territory for the first time since 2012.

Despite the growth of pessimistic attitudes, the FSB found many immediate economic conditions improving, with small firms reporting greater access to finance, a rise in new employment and reduced spare capacity in their businesses.

The share of small businesses aspiring to grow over the next 12 months also ticked up this quarter, now at 55 per cent, the highest level since the end of 2015.

Additionally, small businesses have also started to take on new staff, with a net balance of seven per cent of small firms report increasing headcount this quarter, with this positive trend to continue into the final quarter of 2016.

Mike Cherry, FSB national chairman, said: “There is no doubt that the political shock of the Brexit result has taken place at a time of weakening business confidence. For the first time in four years, confidence is in negative territory. This persistent downward trend in UK business confidence reflects underlying issues that predate the Brexit decision.

"Small firms are resilient and will survive the current fragile economic outlook, but to avoid an economic slowdown this data should be a wake-call for our elected politicians. The UK small business community seek key domestic policy decisions if we are to grow, to invest, to export and to create jobs. We look to the party conferences and upcoming Autumn Statement to green-light infrastructure projects at local and national level, to simplify the tax system and to help reduce the costs of doing business."

The FSB surveyed 1,035 small firms between July and August.