No-deal prospects hit confidence levels among East's smaller businesses
PUBLISHED: 15:55 30 September 2018 | UPDATED: 16:00 30 September 2018
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The Brexit negotiations stumble on but in the meantime small firms are losing confidence, according to a major new survey.
Rising costs, a shortage of skills and the government’s inability to provide clarity on Brexit are weighing heavily on the feelings of small business owners in the East of England.
That’s according to the latest Small Business Index (SBI) published by the Federation of Small Businesses, which shows confidence in the region’s firms has fallen again.
Amid ongoing Brexit uncertainty, around one in three (32%) small firms in the region expect their performance will improve over the next quarter.
But the overall confidence measure for the East stands at +2.3 in Q3 2018, down from +18 in the previous quarter.
Nationally, confidence dropped significantly, with the UK confidence measure standing at -1.7 in Q3 2018, down from +12.9 in Q2 2018. The negative reading is the third since the EU referendum in Q3 2016 and comes as the UK’s talks with their European counterparts reach a crunch point, with the prospect of a damaging no-deal Brexit appearing increasingly likely.
In the East, 29% of small exporters report falling international sales in Q3 2018, with slightly less (26%) expecting this trend to continue in Q4. Among the self-employed, the national confidence figure fell to an all-time low of 18.4.
The government recently confirmed it would renege on its promise to abolish Class II National Insurance Contributions (NICs) – a move forecast to cost sole traders an estimated £1bn in the three years to 2021.
FSB East Anglia area lead David Howell said: “Confidence within our self-employed community has fallen sharply. This government needs to do some soul searching – a broken promise on Class II NICs, failure to take full responsibility for delivering a pensions dashboard and threats to the New Enterprise Allowance have the self-employed once again questioning whether this administration is on their side.”
Three-quarters (75%) of small businesses report rising operating costs with labour (43%), inputs (42%) and fuel (46%) the main causes.
With employment levels at record highs, 76% of small firms in the region have increased wages over the last 12 months.
Mr Howell said small firms were “crying out for more support” especially with bringing in new skills, including those furthest from the labour market.
The survey is the latest to show the damaging impact on confidence of the ongoing Brexit negotiations, with a British Chambers of Commerce survey showing one in five would cut investment and a similar number would cut staff or move operations abroad.