By September 22, 2015 0 Comments Read More →

Small business confidence shaken by summer budget

By Itrat Bashir

The Federation of Small Businesses (FSB)’s Small Business Index (SBI) has released its latest findings for the third quarter of 2015, with the results identifying that the budget has left small business owners with a shaken confidence. The high morale of entrepreneurs following the general election has swiftly been reversed following the announcement of the summer budget.

While confidence levels remain firmly in positive territory, these latest results show that small businesses appear more cautious about their prospects than in recent quarters. The measures taken in the recent budget, notably increased taxes on dividends and increases in the National Living Wage, has put small businesses in a predicament and they are finding it hard to reconcile with the new challenges.

“The budget left many small firms with real challenges to overcome in how they operate in the future. Now they need reassurance from the government and policymakers; their confidence is crucial to driving the economy and job creation,” said John Allan, FSB National Chairman.

The Small Business Index, a measure of small business confidence in the UK, shows confidence levels at +20.3 points, down 17.6 points from the last quarter. This is also lower than this time 12 months ago (+41), but shows confidence still in positive territory.

Regionally, Scotland, Wales, London and the South West witnessed significant falls in confidence while confidence remains strongest in the Midlands and the East of England.

John Allan said, “Confidence has cooled as businesses face a number of challenges. Changes to tax treatment on dividends will affect many small business owners with modest incomes, while small employers also face steep increases in the National Living Wage just as they are preparing to bear the cost of pensions auto-enrolment. The reaction to these changes is reflected in the evidence, which shows confidence levels amongst members cooling markedly.”

The SBI figures also suggest that there will be a downward trend in the growth of businesses in the next 12 months. However, growth remains in the positive territory; nearly six in 10 small businesses (58.7 percent) plan to grow, down from 65.3 percent in the second quarter.

However, the Index had some positive news; many small businesses showed the intention of continuing to create jobs, although at a lower rate than previously. The data for business productivity is also encouraging; it will continue to rise sharply. It is expected to touch the three percent figure this quarter, which was only 0.6 percent in the corresponding period last year.

“Despite confidence levels slipping back, our members remain steadfast in their intentions to grow, to create jobs and to export.” However, John Allan advised the government to reassure small firms and create the right environment for them to flourish.

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