Although the latest Federation of Small Businesses (FSB) Small Business Index report also found that first-quarter confidence levels had recovered strongly from the end of 2021, optimism remains lower than in the same period last year.
A record 87 per cent of small business owners said operating costs were up compared to this time last year with fuel and utilities the biggest contributors followed by tax amid the hiking of business rates and National Insurance contributions.
Rising wages were also highlighted, and the majority of small business owners also said they were operating below capacity amid supply-chain issues.
FSB national chair Martin McTague said that although it was encouraging to see small business confidence back in positive territory, the picture across sectors was “distinctly mixed”.
He also said: “As things stand, spiralling costs are eroding small business margins at a rate that many have never experienced before, whilst workplace absences are making it hard to operate at full capacity in a tight labour market. At the same time, new paperwork and supply-chain disruption are weighing on our importers and exporters, and an endemic poor payment culture continues to destroy thousands every year.”
Mr McTague also said UK government statistics show that 500,000 people, including many over-50s, have stopping working altogether, and he believes they should be encouraged to start a small business this summer. "Policymakers should be doing all they can to facilitate and encourage start-ups and side hustles,” he added.