Confidence among small firms in the South East has fallen significantly, according the latest SBI from the Federation of Small Businesses (FSB).
The South East’s SBI confidence measure stands at -5.7 in Q4 2018, down from +3.2 in the previous quarter.
Nationally, confidence has reached -9.9 in Q4 2018, reflecting a level of pessimism not seen since the aftermath of the financial crash. The second-lowest UK SBI reading since 2011 was recorded in the wake of the EU referendum (-2.9).
In the South East, almost four in ten (37%) of small businesses expect their performance to worsen over the coming three months.
With EU net migration to the UK at a six-year low, skills shortages are intensifying. The number of small firms in the South East citing lack of access to appropriately skilled staff as a barrier to growth is now above a third (31%).
Almost three quarters (72%) of small firms in the region do not expect to increase capital investment in the coming three months. A total of 13% are planning to actively decrease investment. Nationally, this figure is at one in seven (15%) – the highest since Q3 2016 as businesses pause expansion plans amid unprecedented uncertainty.
FSB Area Leader Deborah Turner (pictured below) said: “We’ve not seen political uncertainty weighing on small business confidence like this for many years, and the recent NO vote on the withdrawal deal has done little to help. Planning ahead has now become impossible for a lot of firms as we simply don’t know what environment we’ll be faced with in little more than 100 days’ time.
“Politicians of all stripes need to take account of the UK small business community’s mounting concern; the economic warning signs are now flashing red. MPs should talk to their local business community and be ready to act to protect the small firms which employ 16 million people.
“As things stand, Brexit is absorbing all of the UK’s political bandwidth. Once resolved, we must get back to issues on the domestic agenda: a late payment crisis that destroys 50,000 firms a year, an outdated business rates system and spiralling employment costs.”
Nationally, small businesses are continuing to hire new personnel, with more than one in six (16%) taking on a member of staff in the past three months. Seven in ten (68%) have increased pay compared to last year, significantly more than in the same period in 2017 (58%). Close to one in three (29%) have increased wages by 4% or more.
The proportion of small exporters in the UK expecting international sales to fall next quarter has soared to a four-year high, surpassing 30% for the first time in that period. The figure is up 14 percentage points compared to Q4 2017.
Almost half (45%) of small firms in the South East still aspire to grow their businesses over the next 12 months.
Deborah Turner added: “These figures are testament to the resilience of small business owners right across the UK. They’re still hiring, increasing wages and aspiring to grow.
“All is certainly not lost. There is a huge amount of drive and ambition among our small businesses. If they’re given certainty and the support they need, their full potential can be realised.”