SME confidence returns despite economic woes

Small business owners are feeling increasingly confident about their future, despite ongoing economic instability.

According to the latest UK small business index from the Federation of Small Businesses (FSB), two in five small- and medium-sized enterprises (SMEs) saw their revenues fall in the third quarter of the year, while only one in three saw an increase, However, overall SME confidence rose by 6.2 points on the previous quarter, indicating new optimism over the future of the economy.

Despite this, business confidence is still low, with an overall rating of minus eight. This is the sixth quarter in a row where the small business index has been in negative territory.

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“After the economic turmoil wrought by the cost of doing business crisis over the past year and a half, our latest small business index shows signs of stabilisation in small firms’ performance,” said Martin McTague, national chair of the FSB.

“The improvement in the overall confidence measure since Q2 is a good start, but we really want to see it firmly back in positive territory, rather than eight points below zero, as it is currently.

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“We also need to beware that stabilisation does not turn into stagnation, and that intentions to invest and grow are not thwarted by economic circumstances, holding back the performance of the UK as a whole.”

McTague added that small businesses were comforted by a pause in the successive base rate hikes during the third quarter of the year, which have heaped pressure on SMEs seeking finance.

“With the lending environment so tough for small businesses, the Bank should avoid worsening the situation by removing the valuable SME supporting factor,” he said.

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