Small business confidence sees strong recovery

A new report revealed that confidence among the UK’s smaller sized businesses recovered strongly in the first quarter of 2023.

All the main industry sectors analysed in the FSB’s UK Small Business Index (SBI) saw improvements in their confidence ratings – this was particularly high within the wholesale and retail, accommodation and food, manufacturing, and information and communication areas.

However, overall business confidence is still in slightly negative territory with the cost of living crisis holding back growth.

Martin McTague, FSB’s National Chair, said, “Our latest Small Business Index data shows that small firms may be about to turn the corner and rebound after the pandemic and the energy crisis, with confidence recovering alongside improved optimism for Q2.

“However, there are still plenty of dark clouds on the horizon that could dampen small business recovery. The prospect of further interest rate rises is causing significant disquiet, at the same time that costs remain at serious highs.”

Martin added, “If rate hikes outpace or outlast the prices they are meant to control, this would be an extra pressure on small firms whose cash reserves remain at historic lows, and it’s no surprise that small firms’ views of available finance options are downbeat, in line with their abilities to invest and grow.

“In addition, the withdrawal of the Energy Bill Relief Scheme leaves a group of small firms exposed to high prices in fixed-rate contracts from last year unable to negotiate a new contract – due to a standoff between energy companies and Government. Utility bills were still cited in our survey as a driver of inflation and a barrier to growth, despite the EBRS only closing at the end of the first quarter.

“While our research may provide a glimmer of hope that things are looking up, it’s important to remember that small businesses have shown incredible grit and determination in the face of adversity, and these figures are a real testament to that.”

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