Business confidence recovering

Business confidence is being restored after plummeting at the end of last year, but ‘dark clouds’ are on the horizon as costs remain high, according to a new report.

Sentiment improved among small business owners and sole traders over the first three months of the year, a welcome step for the wider industry, the Federation of Small Businesses (FBS) found in its survey.

Nevertheless, the FSB’s confidence measure scored minus 2.8 points in the first quarter of the year, which means more firms felt pessimistic than optimistic.

But it was a substantial improvement from the confidence slump in the final quarter of 2022, which had a negative reading of minus 45.8 points as retailers and hospitality firms were struck by higher costs and dampened consumer spending.

The FSB, which represents more than 150,000 business owners and self-employed workers, surveyed nearly 700 people in the latest iteration.

It found a major uptick in confidence among sectors including retail, accommodation, food and manufacturing in the latest survey, although they all remained in negative territory.

Meanwhile, the tech and science sectors were leading the way with a positive confidence reading of 14.9 points.

Falling sales were an issue for many small firms over the first quarter.

Two in five small businesses said their revenues fell during the period, compared to a third who said sales had risen.

Aroundninetenthsofbusinesses said their costs were higher than in the same period last year, largely thanks to soaring utilities costs.