Small firms confident
DESPITE spiralling costs small firms in the North West are feeling more confident and planning to take on or maintain staff, with international trade playing a major role, according to the latest FSB Small Business Index (SBI).
The recovery has been spurred by increased international trade. More than two thirds (69%) of exporters surveyed in the region state that international sales have been steady or increased in Q1. The vast majority (85%) expect this trend to continue over the coming three months.
The recovery in confidence comes despite a surge in the cost of doing business. Seven out of 10 small firms across the North West report a rise in operating costs over the past quarter.
The average FSB employer will face £2,600 in additional employment costs over the coming year as a result of the rise in the National Living Wage, resulting National Insurance contributions and pensions auto-enrolment.
These cost pressures are being exacerbated by rising inflation. The Consumer Price Index (CPI) rose above the Bank Of England’s 2% target to 2.3% in March. Firms are struggling with increased prices when buying supplies, products and services, but the rise in inflation will also impact other bills, such as business rates.
However, the region’s firms remain optimistic about hiring new staff. Almost all (92%) small firms surveyed in the North West expect to maintain or increase their headcounts over the next quarter.
Phil McCabe, development manager for FSB Merseyside, West Cheshire and Wigan, said: “It’s hugely encouraging to see our small businesses trading more overseas, driving an export-led recovery.
“We know that small firms that export have higher turnovers than those who rely on the domestic market, so it’s crucial that ● the Government maximises cross-border trade opportunities for small firms.
“That includes negotiating an ambitious free trade agreement (FTA) with the EU as part of the Brexit process.
“The FTA must include a dedicated small business chapter and ensure the easiest possible access to the single market.
“Our latest Brexit research finds that over a quarter of FSB exporters would be deterred from trading with the EU27 by a tariff of any size.
“We cannot rely in the long-term on the boost that exporters have received from a weak pound.
“To maintain export growth, we need to focus on opening up new international markets and getting more small firms exporting.”