<?xml encoding=”utf-8″ ?????????>
SME confidence has slumped in the second quarter as the effects of rising rates and a stalling economy is felt, according to The Federation of Small Business’s (FSB) Small Business Index.
The FSB’s Index dropped to minus 14.2 points in the second quarter, down 11.4 points in the first quarter of the year, reflecting the pessimistic economic conditions small enterprises navigated over the past quarter.
Each sector was hit differently, with confidence among wholesale and retail firms declining by 12.6 points, and professional, scientific and technical firms being the only major sector to reach positive territory, hitting 7.8 points.
Steven Mooney, CEO of FundMyPitch commented: “As economic conditions continue to present challenges to small businesses in the UK, more support must be shown to the entrepreneurs who will ultimately support the growth and stability of our economy. Times are tough for business owners as investors hold back on providing them with the adequate support they need to grow. As the UK rebuilds itself, SMEs will act as a key driver of growth and for the country to remain an international hub, increased business support is needed providing SME owners with the confidence they need to return to usual operations and fight back against uncertain times.”
This comes as the most recent inflation figures, falling to 7.9 per cent, stubbornly remain above the Bank of England’s target (2 per cent), which has forced the Bank to increase rates faster and higher than many predicted. Traders now expect that the base rate will reach a peak of 5.75 per cent.
More broadly, economic output fell 0.1 per cent in May from April, which could be down to the additional holiday from the King’s coronation.
Khalid Talukder, Co-Founder of DKK Partners commented: “Businesses have faced turbulent times over the past few years and as uncertainty continues to prevail, it is no surprise that confidence has been shaken. However, despite the hardships that many small business owners have faced in recent times, they must remain confident that the economy will bounce back as they play a vital role in its recovery, acting as the lifeblood of the UK.”
“As SMEs foster innovation, attract overseas investors and promote international relations, the correct support is needed to allow the UK to cement its global position, with sights set on tech superpower status. We have seen business support from the government and regulators since the beginning of the year and as it unveils the new Digital Sandbox, hoping to support businesses safely develop technology offerings, it is clear the UK is promoting business growth, providing a positive outlook for SMEs across the country.”
Martin McTague, FSB’s national chair, commented: “Amid the rate rises and sticky inflation of the second quarter, and with economic growth underwhelming at best, it’s disappointing but perhaps not surprising that the momentum from the first three months of the year petered out somewhat”.
Over four out of five firms had said that costs had risen since the same time last year amid rising rates and soaring inflation.
New records were also hit as almost on third of firms who applied for finance were offered a rate of 11 per cent or more, whereas this was only true for just 12 per cent of firms last year.
McTague added that “small firms are survivors and there are positive signs in our findings” and recent inflation figures offer “a small sign of hope that inflation may finally be on its way to being tamed”.
