Government holds key to confidence boost for UK SMEs

Small business

The government must deliver on promises to overhaul business rates, tackle the late payment of commercial debts and improve infrastructure if business confidence is to be revived in 2020, an employers’ group has warned.

The Federation of Small Businesses said that companies would be hoping that the adage “the night is darkest before the dawn” holds true as it revealed that its quarterly measure of members’ confidence was at its lowest ebb since the recession that followed the banking crisis.

It said that its most recent survey, conducted before the general election, had found companies “gripped by pessimism” linked with political uncertainty, concerns about the future direction of global trade and rising employment costs.

Its small business index, a measure of sentiment among companies, has been in negative territory for six quarters and is now on a par with where it stood in 2011. Moreover, the federation found little confidence that the new year would bring an improvement, with almost half of the 1,029 businesses surveyed expecting their performance to worsen over the coming three months. Fewer than one in four expected trade to pick up.

Pessimism was especially pronounced in retail and the gloom will not have been lifted by weak Christmas trading. More than one in three small companies cited consumer demand as a barrier to growth, a three-year high, the FSB said.

Labour costs were also identified as a barrier. One in ten small companies said that they were planning to increase their workforces over the next three months, a five-year low for the index.

Fewer than one in four exporters anticipated that international sales would increase over the next quarter, while a third expected them to drop — a five-year low and high, respectively.

Craig Beaumont, director of external affairs at the federation, said: “The incoming government has made some very positive commitments to the small business community, particularly where connectivity, employment costs, business rates and late payments are concerned. It now needs to deliver.”