The East Midlands Small Business Index (EMSBI), which measures confidence amongst businesses, has fallen once again in Q3 as the prospect of a return to financial certainty has now dissipated. The index score now sits at -29% after having been at 0% in the last quarter.
- Confidence in business performance for the next three months falls again as the East Midlands suffer from renewed economic uncertainty due to the pandemic.
- The proportion of East Midlands Small Businesses reporting a decrease in revenue over the last three months of Q3 is the highest it’s been since EMSBI began.
- East Midlands small business owners have reduced staff numbers, however the reduction has not been as significant as was predicted three months ago.
- Twice as many businesses have decreased (17%) the amount of staff currently employed vs. those who’ve increased staff (8%).
- Despite being one of the worst affected regions for decline in revenue in the last three months, East Midlands small business owners are the most optimistic about future revenue.
The uncertainty seen amongst East Midlands small businesses is reflective of a wider trend across the country, as index scores across the board are on a decline. Nevertheless, the East Midlands is one of just three regions to record an index score above -30% indicating that the region is feeling more certain than other regions within the UK.
In Q3, almost three out of five small businesses in the East Midlands reported a decrease in revenue over the last three months, as the nationwide lockdown had a considerable impact on spending opportunities. Some resilience was shown by East Midlands businesses however, with 30% reporting an increase in profit levels over the period.
With a net balance figure of -29% for Q3, East Midlands small business revenues were one of the worst hit in the country. By contrast, the highest net profit change was Yorkshire & North East with -17%, more than 10% higher than the East Midlands.
When it comes to predicting future revenue, the East Midlands is the most positive region with a net balance of -6%. Despite still being in negative territory, it’s a figure which is more optimistic than all its counterparts around the UK, including North East & Yorkshire (-33%) and West Midlands (-34%).
While a significant number of East Midlands businesses do expect a decrease in revenue in the next three months (39%), this figure is the lowest in the country, with an average across the UK of 50% anticipating a decrease.Click here to read the report
FSB East Midlands Policy Representative Michael Weedon said: “The East Midlands Small Business Index (EMSBI) shows how small firms in the region continue to be affected by the pandemic, particularly in relation to general business conditions and employment intentions. Yet stoicism remains in place with investment intentions expected for many in the next 12 months, but it is confidence and certainty that businesses need at this time, particularly for businesses most in need of support in the hospitality, retail and tourism related sectors.”
“Small businesses have followed the guidance, protected the health of their staff and customers, and invested in making their business COVID-safe. The announcement of a second lockdown, however necessary, will inevitably leave many small firms facing the bleakest winter they have ever seen and the second deep recession in twelve months. Urgent clarity is needed on how small businesses and the self-employed will be supported through this.
“We welcomed the Chancellor’s enhancement of existing schemes last week, along with the extension of furlough scheme, but we are now calling for fresh interventions to help those that have received no income support to date, reduce the costs of hiring, further alleviate the business rates burden and provide more resources for those looking to start-up for the first time.”
“Too many are still without the help they need to weather current disruption – not least company directors, the newly self-employed, those without premises and those further down supply chains in the retail, leisure and hospitality sectors. An ambitious rescue package for these groups is urgently needed. East Midlands Local authorities should use the new discretionary funds being allocated this week to assist them wherever possible.”
“With the unemployment rate rising, we’ll need to encourage more of those who are out of work to strike out on their own over the months ahead. A Kickstart Start-Up programme, inspired by the Kickstart employment initiative and building on the success of the Start-Up Loans and the New Enterprise Allowance programmes, could mark a way forward.
“Equally if we want small business owners to create jobs, we have to bring down the costs of employment, starting with Employer National Insurance Contributions. If we want them to invest, innovate and expand, we have to alleviate the strain of wider government-imposed overheads, including those stemming from an outdated business rates system which continues to stifle too many community businesses all over the country.
“Now that support measures are continuing through to the Spring, we should also avoid a scenario where businesses suddenly go from going from paying 0% to 100% of their business rates bills in April. And help should be expanded to firms in industries that have not benefited as much as those in retail, leisure and hospitality.”
The East Midlands Small Business Index is a weighted index of the responses to the question: ‘Considering your overall business performance, and ignoring any normal seasonal variations at this time of the year, how do you view business prospects over the next three months, compared with the previous three months?’ The share of firms reporting ‘much improved’ are given the following weightings: +2, slightly improved +1, approximately the same 0, slightly worse -1 and much worse -2; the Small Business Index is derived from the sum of these factors.