An SME report has shown a mixed bag across industries, with some not expecting to grow due to the cost-of-doing-business crisis and a widening sectoral optimism gap.
The Federation of Small Businesses (FSB) has released its latest quarterly Small Business Index (SBI), revealing a confidence reading that stands at +15.3 for Q1 2022. The figure is down 12 percentage points on the same period last year but is up significantly on Q4 2021 (-8.5).
The industries that are the most optimistic include accommodation and food (+16.5), and those involved in information and communication activities (+32.1).
Manufacturing (-9.1) and wholesale and retail (-8.2) firms report negative readings as surging operating costs, supply chain disruption, labour shortages and consumer belt-tightening have had a negative impact on expansion plans.
A staggering 87% (a record high) of SMEs say that operating costs are up compared to this time last year. Fuel (60%), utilities (58%), and taxation (27%) are cited as the main contributors to this increase, following the hiking of national insurance rates and issuing of new business rates bills this month.
FSB National Chair Martin McTague said, “It’s encouraging to see small business confidence back in positive territory, though the picture across sectors is distinctly mixed.
“The small business community shrank in size to the tune of hundreds of thousands over the pandemic. With Covid numbers now falling, this needs to be the summer where we start to reverse that trend – policymakers should be doing all they can to facilitate and encourage start-ups and side hustles.
“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.”
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