While Brexit has taken its toll across business sectors, a new report issued this week by the Federation of Small Businesses (FSB) suggests that at least confidence levels are beginning to return to something like normal following June’s referendum.
According to the FSB, The headline confidence measure in its Small Business Index (SBI) now stands at +8.5, up from -2.9 in the previous quarter and reaching almost exactly the same level as it stood at the start of 2016 at +8.6. This survey confirms that at the start of 2017, the UK’s small firms are upbeat about their prospects.
FSB chairman Mike Cherry said he was delighted to see confidence bounce back at the end of 2016, “Effectively wiping out the fall we saw over the course of the year in the run-up to the EU referendum and its immediate fallout.
“The current economic outlook seems brighter, and UK small businesses are ambitious and want to make the most of it. Small exporters continue their strong rise, as UK goods and services become more competitive overseas and small businesses go out to find new markets and new customers.”
Some concerns remain
However, there are still some concerns dogging the SME sector: There has been a dramatic increase in the number of firms citing the exchange rate as the main cause of cost inflation, currently at 28 per cent, compared to just 5.4 per cent a year earlier, as the pound remains at consistently lower levels against other major currencies.
As a result, the share of small businesses that say they plan to grow over the next 12 months has slipped, with a significant increase in those expecting to stay the same size – 37.5 per cent compared with 27.4 per cent in Q2 2015. “To increase economic growth and productivity, the Government must look at how the business policy framework can help all small firms move into moderate growth – and not simply focus on start-ups and scale-ups alone,” the Federation says.