Political Uncertainty Holding Back Small Business Growth
Survey evidence shows that small firms are struggling to expand, hire and raise productivity as political uncertainty takes its toll on the economy.
Published by the Federation of Small Businesses (FSB), the Small Business Index (SBI) tracks the confidence of and outlook for small businesses in the UK.
It shows that investment intent is at a two-year low, with 72% of small firms not planning to increase capital investment.
Across all businesses, investment has fallen for four straight quarters according to . This is the first time this has happened since the financial crisis.
In the FSB’s survey, small businesses named access to the right staff as the main barrier to growth. More than a third (35%) of small companies said that not being able to find appropriately skilled staff hampered their growth prospects their growth prospects.
The FSB suggests that, because one-in-five small employers rely on staff from the EU, falling net migration from the continent has affected small firms.
The SBI also measures small business confidence. For Q2, the confidence measure was at -8.8, a full 22 points down from the same period last year. The latest quarter also represents the fourth consecutive quarter when this confidence measure has had a negative rating.
FSB National Chairman Mike Cherry said: “It’s impossible for small business owners to invest for the future when we don’t know what the future holds.
“We urgently need to see both prime ministerial candidates spell out their plans for supporting small firms and securing a pro-business Brexit – one that encompasses a comprehensive deal and a substantial transition period. Fast and loose talk about accepting a chaotic no-deal Brexit in four months’ time is not helpful.
“Lifting productivity among the smaller firms that make-up 99 per cent of our business community is a must. But until we have the political certainty that enables us to take risks and innovate, achieving that goal will remain elusive.”
The small business survey also revealed that only one in seven (14%) of small firms are applying for credit.
More than four in ten (43%) small businesses said that new credit is ‘unaffordable’. And of the firms that did secure credit, only 15% used the new finance to expand their businesses.
Miles Grady, Director of said: “Britain’s 5.6 million small businesses employ 16.3 million people and generate the majority of private sector turnover.
“If these firms find it difficult recruit, borrow and grow then the economy will always feel the effects.”
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