Small business confidence takes second quarter hit

Confidence among the UK’s network of small businesses took a hit in the second quarter, according to new figures from the Federation of Small Businesses.

Business owners voiced concerns over their growth prospects in light of slowing economic conditions – named by 52% of those polled as the biggest barrier to expansion.

Firms also revealed that their operating costs are at their highest point since 2013 – a net balance of 66% noted an increase which has put pressure on their bottom line.

It’s important to note that the East Midlands, Wales and London were more positive than other areas of the UK, while confidence also varied depending on the sectors businesses are in.

Whereas IT, communication and manufacturing firms were among the most confident, that view was not shared by those on the retail, arts, entertainment, and recreation sectors.

A continued squeeze on household spending has impacted on retailers according to the FSB, with reduced sales placing pressure on finances and causing cash flow issues in some instances.

Wage growth has also dropped, particularly among small firms, as businesses look to ensure that they have adequate spare finances to meet their essential outgoings.

As a result, the risk of insolvency among small businesses is creeping up and a focus on financial management is required to ensure that firms can successfully keep trading.

FSB Chairman Mike Cherry added that current confidence levels are significantly below the highs that were noted in the late part of 2016.

Retailers in the North East, especially shoe and book shops, are a facing a number of problems and are most likely to face financial difficulty in the next year, figures from insolvency and restructuring trade body R3 show.

The region’s construction sector is also facing an above average risk of insolvency when compared to the rest of the country, a situation echoed in the North East’s hotel and agricultural sectors.

North East R3 Chairman Neil Harrold said he expects the situation to improve for retail firms though, as the second half of the year is traditionally stronger for the sector.


By Phil Smith


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