Confidence among small firms in the East has fallen significantly, according the latest SBI from the Federation of Small Businesses (FSB).
The region’s SBI confidence measure stands at -13 in Q4 2018, significantly lower than even the national figure of -9.9. This reflects a level of pessimism not seen since the aftermath of the financial crash. The second-lowest UK SBI reading since 2011 was recorded in the wake of the EU referendum (-2.9).
In the East, half of small businesses expect their performance to worsen over the coming three months.
With EU net migration to the UK at a six-year low, skills shortages are intensifying. Almost three quarters of small firms in the region do not expect to increase capital investment in the coming three months. A total of 16% are planning to actively decrease investment. Nationally, this figure is at one in seven (15%) – the highest since Q3 2016 as businesses pause expansion plans amid unprecedented uncertainty.
Alan Todd, area leader for Bedfordshire, Cambridgeshire and Hertfordshire said: “We’ve not seen political uncertainty weighing on small business confidence like this for many years. Planning ahead has now become impossible for a lot of firms as we simply don’t know what environment we’ll be faced with in little more than 100 days’ time. The present uncertainty is very concerning to the region with the large number of international businesses trading in the area. Small businesses are in their supply chain and rely on their continued health too. Added to the Brexit uncertainty is the trade tensions between USA and China, we know, for example of the trade links between Cambridge and China and this could lead to a slowdown in investment. “
“A pro-business Brexit is one that ensures we can trade easily with the EU and have access to the skills we need. The latter is already proving a challenge and – if we crash out of the EU on 29 March without a deal – the former will go out the window.
“Politicians of all parties need to take account of the UK small business community’s mounting concern; the economic warning signs are now flashing red. MPs should talk to their local business community before the upcoming meaningful vote and be ready to act to protect the small businesses which employ 16 million people.”
He continued: “They need the Brexit issue resolved, so we can get back to issues on the domestic agenda: a late payment crisis that destroys 50,000 firms a year, an outdated business rates system and spiralling employment costs.”
Nationally, small businesses are continuing to hire new personnel, with more than one in six taking on a member of staff in the past three months. 68% have increased pay compared to last year, significantly more than in the same period in 2017. Almost a third have increased wages by 4% or more.
The proportion of small exporters in the UK expecting international sales to fall next quarter has soared to a six-year high, surpassing 30% for the first time in that period. The figure is up 13 percentage points compared to Q4 2017. Almost half of small businesses still aspire to grow their businesses over the next 12 months.
Alan Todd added: “These figures are testament to the resilience of small business owners. They’re still hiring, increasing wages and aspiring to grow. There is a huge amount of drive and ambition among our members. If they’re given certainty and the support they need, their full potential can be realised
