Small business confidence plunges as inflation hurts customer spending

Business confidence remains low as we go into 2018

Business confidence remains low as we go into 2018

"While the swift agreement of a transitional arrangement and an ambitious free trade agreement with the European Union are absolutely critical, it's spiralling costs, weak growth and flagging consumer demand at home that are front of mind for small firms day to day", Cherry added.

The latest Scottish Small Business Confidence index saw a fall to -21.4 points in the final quarter of previous year.

The first negative reading of -2.9 was registered in the wake of the European Union referendum.

Around 31 percent of firms expect their performance to worsen over the next three months, while about 27 percent expect an improvement.

In addition, a record one in seven (14 per cent) small business owners are planning to downsize, close or sell their business over the coming three months.

The FSB said three quarters of firms were experiencing a rise in operating costs versus a year ago.

Three-quarters of firms said operating costs are up on the year as labour, utility and input costs climb.

Meanwhile profitability has fallen with the proportion of small businesses reporting a fall in profits is at its highest since 2013.

The condition of the domestic economy was highlighted as a barrier to growth by more than half (52%) of the Scottish businesses surveyed by FSB. Additionally, 55% of small-business owners believe Britain's weak economy will stifle their growth, while 34% are worrying about falling consumer demand, another 34% access to skilled staff and 20% regulatory hurdles.

The FSB's national chairman MIke Cherry said that domestic economic challenges need more attention at a time when Brexit negotiations are dominating the political agenda. Equally, small firms in dozens of local authority areas are still being denied the emergency business rates support they were promised last Spring.

Cherry suggested the announcement of measures to help businesses at the Autumn Budget, including a VAT threshold freeze, an early switch in the inflation measure used to increase business rates and an end to the staircase tax could help spark a recovery in confidence.

The survey also found only 13 per cent of small firms have increased their headcount this quarter - the lowest figure in a year. Whether it's about hitting the gym more frequently or getting that startup off the ground, come January 1 many people feel bullish about the 12 months to come.

However, exporting small businesses provided a bright spot amid an otherwise gloomy landscape, with the 77 per cent proportion reporting that global sales are stable or increasing going up after continued strength in 2017. Many also want to see new agreements struck with key markets beyond the Continent, not least the US, Australia and China. Retailers and construction firms are particularly pessimistic on the outlook for the coming year. We're giving away £5,000 every month in a free-to-enter competition.

Notícias recomendadas

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.