Confidence among small businesses turns negative

Smaller firms are increasingly worried about prospects for the UK economy even though they continue to recruit staff and enjoy greater access to finance, a new report shows.

Small business confidence fell into negative territory for the first time in four years. Picture: Ian Rutherford

The Federation of Small Businesses (FSB) said confidence had continued to fall, with business owners feeling optimistic about the future being outnumbered by those who felt the opposite.

A survey of over 1,000 FSB members revealed that just over half were aiming to grow in the next year and many were recruiting. But the poll – the first by the FSB since the EU referendum – reflected a “fragile” outlook for the economy.

FSB chairman Mike Cherry 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.”

Adrian Sainsbury, commercial division chief executive at finance group Close Brothers, said the short-term economic impact of the decision to leave the EU “does not so far seem to be as severe as first feared”, although he acknowledged it would some time before the longer-term consequences become clear.

He added: “Despite this uncertainty, SMEs have not stood still. Many have proved their agility and have already introduced contingency plans, refined their business strategy, or indeed invested to take advantage of newfound post-referendum opportunities. It is particularly encouraging to see many are looking to invest in their workforce through increased training and internships to unlock their potential.”

Jon Trickett, shadow business secretary, said: “The fall in business confidence for the third quarter in a row is another sign that uncertainty surrounding Brexit is harming Britain’s business environment.

“Britain’s businesses have proved remarkably resilient given the government’s complete lack of contingency planning for Brexit – unlike the government, Britain’s small business owners should be applauded for getting their heads down and getting on with it.”

Small business minister Margot James said: “The UK’s record number of small businesses create millions of jobs and contribute over £1 trillion to our economy. It’s encouraging to see growth, exports and access to finance continue to increase as small businesses seize the opportunities available to them.

“This government wants small businesses to thrive and we will be appointing a Small Business Commissioner to be a powerful representative of small firms across the country.”

Click here to ‘Like’ The Scotsman Business on Facebook